The State Administration of Taxation of China issued an announcement updating the rules on advance pricing agreements (APAs) (SAT Gong Gao [2016] No. 64) on 11 October 2016. The announcement seeks to improve APA management and implement the tax treaties concluded by China. The announcement will apply from 1 December 2016, and chapter 6 of the Implementation Rules on Special Tax Adjustments (GuoShuiFa [2009] No. 2) will be abolished on the same date.

As per the Notice SAT Gong Gao [2016] No. 64 which made amendments to the Notice GuoShuiFa [2009] No. 2, an enterprise for which the total annual amount of related transactions exceeds CNY 40 million in the preceding 3 years, prior to the tax year when the Notice of Tax Items concerning the acceptance of negotiation intentions by the competent tax authority is delivered, may reach an APA with its competent tax authority concerning the pricing policies and calculation methods for its related transactions in future years.