How to Align the Value Creation Factors on the Rubik’s Cube

How to Align the Value Creation Factors on the Rubik’s Cube: Techniques to Excel in Value Chain Analysis

By: Steef Huibregtse and Ying van Galen Wang.

China has made significant strides in implementing G20/OECD BEPS actions related to transfer pricing, with recent releases of Bulletins 42, 64, and 6 by the State Administration of Taxation (SAT). These developments have placed China at the forefront of combatting base erosion and profit shifting through transfer pricing. Value chain analysis (VCA) has become a critical aspect of transfer pricing compliance for multinational enterprises operating in China, with Bulletin 42 mandating its inclusion in local file documentation since January 1, 2016. Conducting a proper VCA is likened to solving a complex puzzle, requiring simultaneous consideration of various operational processes and factors driving value creation to align with profit allocation, a critical post-BEPS requirement to avoid tax and transfer pricing issues.

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e. How to Align the Value Creation Factors on the Rubik’s Cube Techniques to Excel in Valu

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