Association relations can be identified when enterprises have one of the following relationships with other enterprises, organizations or individuals:

(1)	One party directly or indirectly holds more than 25% of the other party’s total shares; or a common third party directly or indirectly holds more than 25% of the shares of both sides separately.
(2)	The two parties have shareholding relationship or their shares are held by a common party, even though the ratio of shares is less than the limit in aforementioned provision 1, the total loan between the two parties exceeds 50% of the paid-in capital of either side, or one party’s 10% or above of the total loan is guaranteed by the other side(Loans or guarantees with independent financial institutions are excluded).
(3)	The two parties have shareholding relationships or their shares are held by a common third party, even though the ratio of shares is less than the limit in aforementioned provision 1, one party’s normal business operation relies on patent right, non-patent technology, trademark right, copyright and other concessions of the other party.
(4)	The two parties have shareholding relationship or their shares are held by a common third party, even though the ratio of shares is less than the limit in aforementioned provision 1, one party’s business activities like procurement, sales, purchase and provision of labour service are controlled by the other party.
(5)	More than half of the directors or senior executives of one party (include secretary of the board, manager, assistant manager, chief finance officer and other personnel stipulated by articles of association in listed companies) are nominated or designated by the other party; or serve as director or senior executive of the other party at the Same time, or more than half of the directors or senior executives of both sides are nominated or designated by the same third party.
(6)	Two individuals each have one of the relationships in aforementioned provision 1 to 5 separately with both sides, and the two individuals also have relationships as husband and wife, brother and sister, or they are in lineal blood or other supporting relationship.
(7)	Both parties have other common interests in essence.

Related transactions mainly include below items:

(1)   Transfer of use right or ownership of tangible assets;

(2)   Transfer of financial assets;

(3)   Transfer of use right or ownership of intangible assets;

(4)   Financing;

(5)   Labour service transactions.

(1)       Reports of related transactions

Enterprises are required to submit Annual Reports of Related Transactions, among them the Enterprise Information Form, Summary of Annual Related Transactions and Association Relations Form are required.

(2)      Concurrent data

Enterprises shall prepare concurrent data of related transactions based on the tax year and submit to tax authorities, which include subject file, local file and special file.

(a)	Subject file shall mainly disclose the overall situation of global business of the enterprise group to which the ultimate holding enterprise belongs, including organization structure, business of enterprise groups, intangible assets, financing activities, financial accounting and tax status.
(b)	Local file shall mainly disclose the detailed information of related transactions, including enterprise overview, association relations, related transactions, comparability analysis, selection and use of transfer pricing methods.
(c)	Special file includes cost sharing agreement and thin capitalization special file.

(1)	Subject file shall be prepared when enterprises meet one of blow conditions:
	(a)	There are cross-border related transactions in the current year, and the enterprise group to which the ultimate holding enterprise consolidates has prepared the subject file.
	(b)	Annual related transactions amount exceeds RMB1 billion.
(2)	Local file shall be prepared when enterprises meet one of blow conditions:
	(a)	The amount of ownership transfer of tangible assets exceeds RMB 200 million;
	(b)	The amount of financial assets transfer exceeds RMB 100 million;
	(c)	The amount of ownership transfer of intangible assets exceeds RMB 100 million;
	(d)	The total amount of other related transactions exceeds RMB 40 million.
(3)	Enterprises shall prepare special file of cost sharing agreement if they have signed or implemented cost sharing agreements; enterprises shall prepare thin capitalization file if the related debt equity ratio exceeds the standard scale and they are obliged to explain that the transactions are in line with the independent transaction principle.

(1)	Enterprises shall declare related transactions with annual related transactions reports at the time of submitting the Annual Corporate Income Tax Declaration Forms.
(2)	The subject file shall be finished within 12 months after the end of financial year that applied to the ultimate holding enterprise; local file and special file shall be finished by June 30 of next year after the year in which related transactions occur. Concurrent data should be provided within 30 days upon the request of tax authorities.
(3)	Concurrent data shall be kept for 10 years from the date of completion that required by the tax authorities.