Volume 39 (2011) / Issue 11
Valuation issues permeate all tax laws and regulations. In Chinese value added tax (VAT) and business tax, legal valuation is mandatory under non-monetary consideration transaction, anti-avoidance, and transfer-pricing circumstances. In recent years, tax valuation is becoming more and more complicated in intangible property transactions and financial instrument transactions; these types of transactions constitute big challenges to traditional legal valuation. In China, legal valuation exists in tax laws, accounting standards, and valuation standards; there are some divergences among these regulations. How to coordinate these standards is becoming a critical problem. This article focuses on an analysis of legal valuation in Chinese VAT and business tax, sorts out the concepts evolution from average sale price to market price and to fair value, and points out that the average sale price approach has brought some problems.
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