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The First China-Korea APA Signed in Suzhou

On Dec. 20, SIP state taxation department and Samsung Electronics (Suzhou) Semiconductor Co., Ltd. signed an Advanced Pricing Agreement (APA), effective for the next four years, which will raise Samsung’s profit margin by 10%. The agreement is the first bilateral APA ever signed between China and Korea.

APA is a taxation system adopted by developed countries in recent years, based on the pricing in advance for a fixed future period and related matters agreed upon between taxation authorities and the tax payer. APA allows for a reasonable profit margin for the foreign-invested enterprises and will effectively control the mobility of tax sources and avoid repeated taxation and maintain the state interest without affecting the overall tax volume of the two countries concerned. Samsung Electronics (Suzhou) Semiconductor Co., Ltd. submitted the initial application for APA in Dec. 2005, and was eventually approved to sign it two years later.

Dec. 21, 2007

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