China

An email last night:
"I see that you've started this with an old but still red hot topic: employee stock options.

There is something rather new on the radar screen with all those US imports from China (over $320 billion in 2007). Much of what US companies buy are sourced from 3rd party manufacturers but with the twist that a commission is paid to a related party procurement entity (e.g. a Hong Kong) entity. The question then becomes what the commission rate should be and which method (Comparable Uncontrolled Transaction v. Comparable Profits Method) should be used."

Thanks Hal.

I've also read that China is performing more audits and making more adjustments; what I read estimated that there was a 45% increase in additional tax recipts from audit adjustments in 2007 from 2006, and I'm told that figure will only go up in years to come due to new documentation legislation the country is drafting. So what method is best used to protect your company, or your client, from this increasingly strict legislation?

Best,

Mike