Baker & McKenzie Expands its China Transfer Pricing Practice
Baker & McKenzie has announced that it will be expanding its transfer pricing capabilities in China by entering into an exclusive alliance with TP Management Consulting Limited (TPMC) headquartered in Shanghai. Commenting on the alliance, Michael Olesnicky, who leads Baker & McKenzie’s tax practice in Greater China, noted that transfer pricing has become a major source of controversy in China and internationally with tax authorities increasingly competing with each other for tax dollars. Michael went on to note that “The New Income Tax Law passed this year by the NPC devotes an entire chapter to transfer pricing signalling China’s focus on this matter. We feel that China’s transfer pricing market has evolved to the point where world-class methodologies and water-tight advice are needed to deal with local concerns and with the potential exposure to double taxation.”
TPMC will be headed by Dr. Glenn DeSouza, Ph.D., an economist from the United States, who created and lead the transfer pricing practice in China at a Big 4 firm. Glenn came to China in 1999 and has pioneered many developments from APAs, to core documentation, to China-specific benchmarking. He has been consulted by the State Administration of Taxation (“SAT”) on such matters as the forthcoming documentation requirement. Bringing depth and balance to TPMC are other acknowledged experts such as a senior government official who was in the first batch to specialize in transfer pricing / APAs and Qian Min, a certified tax agent, engineer and CPA, whose clients include many of the largest investors in China.
Commenting on the alliance, Glenn said, “I was the first TP expert in China and have seen our specialty grow but frankly there are still some unmet needs at the top of the market which this alliance will meet. From the standpoint of quality and innovation, Baker & McKenzie is the leader in every TP market in which it elects to participate. Glenn admitted that “At TPMC we do not want to be all things to all people. Our goal is to provide the best quality solutions in those areas where we believe we can bring special value. One obvious area is world-class planning and another area is in documentation, which will soon be mandated in China. Documentation is, to put it bluntly, an enormous compliance burden, and perhaps surprisingly for an adviser, we believe that the clients should bring this process in-house. We believe that the client must be in a position to manage, explain and sustain the results at the end of the process and as professional advisers our role, should be limited to providing expertise and technology that empowers the client to take ownership of the documentation process.”
David Fleming, Managing Partner of the Hong Kong, China and Vietnam offices, said, “This strategic alliance further expands our “on-the-ground” transfer pricing and tax capabilities in China and allows us to provide dedicated service to our clients. China’s economic development and prominence in international trade has led to a dramatic growth in the integration of global operations by companies and we are pleased to be able to extend our service to our clients in this complex and demanding arena.”