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Q:
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What is a master file?
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A:
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In the Announcement No. 42 of 2016 (hereinafter referred to as "Announcement No. 42"), the State Administration of Taxation made it clear that a master file is a kind of contemporaneous documentation, which mainly discloses the overall global business situation of the enterprise group to which the ultimate holding enterprise belongs, eligible enterprises should prepare and provide the master file of their related party transactions in accordance with the requirements of the tax authorities on the basis of the tax year.
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Q:
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Under what circumstances does the enterprise need to prepare master file?
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For an enterprise that has cross-border related party transactions with a tax year, if the total amount of related party transactions for the year exceeds 1 billion yuan, or the enterprise group of the ultimate holding company that has consolidated its financial statements has prepared the master file of the related party transactions, it should prepare the master file. The enterprise which only has related party transactions with domestic related parties does not need to prepare the master file.
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Q:
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What should be disclosed in the master file?
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A:
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According to Announcement 42, the master file mainly discloses the overall situation of the global business of the enterprise group to which the ultimate holding company belongs, mainly including organizational structure, enterprise group business, intangible assets, financing activities, and financial and tax status. For details, please refer to clause 12 of Announcement 42.
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When to submit the master file?
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The master file shall be completely prepared within 12 months from the end of the fiscal year of the final holding company of the enterprise group, and shall be provided within 30 days from the date required by the tax authority. If the enterprise is unable to provide it on time due to force majeure, it shall provide it within 30 days after the force majeure is eliminated.
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Q:
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The master file involves the global business of a multinational enterprise group. Considering the group’s trade secrets, can the master file be submitted in multiple ways?
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The tax authority has no special restrictions on the submission method of the master file. It can be submitted by the ultimate holding company of the group itself, or it can be submitted by a Chinese subsidiary or an intermediary agency.
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How to submit the specific file?
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The enterprise may submit directly to the competent tax authority or through electronic tax bureau.
For enterprise group that need to prepare master file in accordance with regulations, if the enterprises in the group are under the jurisdiction of two or more tax authorities, they can choose any one competent tax authorities to proactively provide the master file. When other enterprises in the group are required to provide the master file by their competent tax authority, they may be exempted from providing the master file after they have reported in writing to the competent tax authority that the group has proactively provided the master file.
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FAQ
