||Issuance of Explanatory Decree No. 11024508100 by the Ministry of Finance on June 24, 2021
||※Should discrepancy due to translation occur, the Chinese version shall prevail.
With respect to cases applying for cross-border bilateral or multilateral advance pricing arrangements in accordance with Mutual Agreement Procedures provisions in applicable agreements on tax matters, the authorized tax collection authorities may negotiate
with the competent authorities of the other contracting parties, and conclude provisions examining whether the controlled transactions fall within the arm’s length range, by either adopting the results of the controlled transactions on a year-by-year basis
or by using the average results of the controlled transactions of the covered years as a whole. On the occasions of the results of the controlled transactions not within the arm’s length range, either an upward or a downward adjustment should be made to the
income of the enterprise at an agreed point within the arm’s length range. This adjustment could either be calculated and made separately to the income of the enterprise on a year-by-year basis or be aggregated as a sum and made one-time to the last year of
the covered term.