Defending Valuations for Equity Transfers of Chinese Enterprises: the intersection of transfer pricing and business valuation analyses

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Peter Guang Chen and Perry Urken look at recent events and discuss how, moving forward, transfers of shares of Chinese enterprises will most likely be priced in a manner consistent with the fair value of the subject shares using widely accepted business valuation techniques. The authors explain that the valuation results derived for FIE shares through these techniques can be extremely sensitive to even minor modifications of prices set for intercompany transactions. For this reason, it is essential that taxpayers incorporate both business valuation and transfer pricing expertise in the analyses used to support their valuation positions for FIE equity transfers.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Peter Chen | Attorney Advertising

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