Value Chain Review
Value chain activities are sets of established value-creating functions of a company. These activities operate within the business scope and eventually help realize the corporate objective of value maximization. Value chain activities can be allocated centrally by regions or can be internationally dispersed depending on the size, geographic focus and strategic decisions of the business, and eventually form a value chain. The value chain can be especially crucial for multinational corporations (MNCs), yet it is so sophisticated that MNCs may hardly be able to manage it efficiently.
Companies need to understand the importance of the alignment between their value chain activities and their tax planning. This is primarily because the value-creating activities of businesses, such as profit allocation and transfer pricing, can have great impacts on respective tax obligations. More importantly, companies must follow the local jurisdiction’s tax code and ensure their value chain activities and strategies are legal and comply with the local tax bureau’s policies. In fact, China State Administration of Taxation (SAT) has recently issued a new set of tax regulations with more strict requirements regarding a company’s value chain activities. According to the SAT Bulletin  No. 42 regarding transfer pricing documentation, companies are required to submit value chain analysis, including logistics and capital flow, innovation, sales and other important value-creating functions within the local file. This suggests that companies in China need to draw particular emphasis on revising their value chain, to achieve more efficient operations as well as to follow the local tax regulations. As Value Chain analysis is becoming increasingly important for businesses in China, hiring an expert to conduct suitable review on the company’s value chain and provide related tax advice has become a better choice for local and foreign companies.
LehmanBrown International Accountants can provide value chain review for your company and related advisory services of your concern. Our experienced and professional team has extensive knowledge on business value chains. We can help your company navigate through the Chinese taxation policies to develop a more mature and comprehensive value-creating network. At LehmanBrown, we understand that each client has specific needs and requirements, and we strive to meet our clients’ standards while maintaining great relationships with them.
For more information about Value Chain Review and other tax consulting services that LehmanBrown can offer, please see relevant web pages.
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