Interpretation of the companies to pay the cost of the related parties to overseas corporate income tax issues related announcement for further standardize and strengthen the foreign related parties pay the cost of transfer pricing management, we released "State Administration of Taxation on overseas companies to pay costs related to business related parties Income Tax Notice "(hereinafter referred to as Notice), are interpreted as follows: First, what information to foreign companies related parties should be prepared to pay? When companies pay to foreign related parties should prepare their contract or agreement entered into with related parties, as well as proof of the transaction actually happened and comply with the relevant information of the arm's length principle. Second, the companies pay to foreign related parties, whether through tax authorities? Businesses pay to foreign related parties, is the business behavior without pay after the tax authorities for examination. However, the tax authorities can under the circumstances, the deadline requires companies to provide their contracts or agreements entered into with related parties, as well as prove that the transaction actually happened and comply with the relevant information of the arm's-length principle, for inspection to determine whether the payments comply with the arm's length principle. For failure to pay in accordance with the arm's length principle to foreign related party expenses, the tax authorities can be adjusted. Third, companies can not accept if the economic benefits of their labor can pay for the services to foreign related parties? When businesses accept foreign related parties providing services, should be based on the principle of benefit, the service benefit analysis carried out, namely: the service can analyze whether directly or indirectly, for the enterprise economic interests. Accept the benefit of the service, you can pay in accordance with the arm's length principle; accept non-profitability of paid labor costs in the calculation of taxable income may not be deducted. Four, how to determine the extent of the contribution of the parties related to the intangible value creation, should be entitled to determine their own economic interests? Companies need to pay for technology, brands and other intangible assets royalties to foreign affiliates, should the parties in the development of intangible assets, the value of promotion, maintenance, protection, application and promotion functions performed, assets invested by analyzing the association and exposures to determine the extent of the contribution of the intangible value creation related parties, in order to determine their economic interests should enjoy, and to determine whether a company should pay royalties to foreign related party transaction in accordance with the principles of independence, how much should be paid royalties. Companies to pay to have the only legal ownership of intangible assets related parties without contributing to its value creation royalties, does not comply with the arm's length principle, in the calculation of taxable income may not be deducted. For example, the domestic real estate companies use foreign related party trademark or brand in real estate development, if the trademark or brand is a domestic enterprise in the real estate development process of gradually recognized by the market, to safeguard and promotion by domestic enterprises, and enhance the value, the in accordance with the arm's length principle, royalties paid by domestic real estate enterprises to foreign related party royalties, in the calculation of taxable income may not be deducted.