In a recent plan for international tax administration, the taxation authority of Jiangsu province suggested that multinational corporations consider Chinese contributions during profit distribution, thepaper.cn reported on Aug. 11.

According to the plan, made by China's State Administration of Taxation (SAT) Jiangsu Provincial Office, changes to the rules of international taxation and increasing demand for tax transparency have brought tremendous challenges to business operations as well as to tax administrations. Multinational corporations always take advantage of the different taxation mechanisms in different jurisdictions to lower their taxable profits, SAT added. This process is called base erosion and profit shifting (BEPS).

Now, though, BEPS is attracting a great deal of attention from national leaders and media and from around the world.

The Compliance Plan on International Tax Administration advises multinational corporations to prevent taxation risks across 13 areas. The paper believes that the specific contribution to the profit should be taken into consideration. Meanwhile, the risks taken by enterprises should be in line with profit distribution.

Wang Jianwei, a professor at Nanjing University of Finance and Economics, said that the compliance plan aims to implement the principles and requirements of the BEPS Action Plan, issued by the Organization for Economic Co-operation and Development (OECD). It reflects the stance of China's taxation authorities on the impact of BEPS.

Senior officials from some firms declined to comment on the plan, but several said that since the profits they gained from the Chinese market were mostly used for investment and production in China, reasonable tax avoidance was not a big deal.