THE RULES AROUND TAX AND ACCOUNTING in China are still developing, so there are many grey areas. This grey area can be so overwhelming that sometimes even the tax authority is reluctant to assist, because they are unclear on how to proceed. Consequently, GAAP is often used to fill the holes in the Chinese taxation system, but this still calls for a lot of negotiation skills.
Eddie Wang is a partner at Hendersen Consulting, a boutique professional accounting service firm based in Shanghai and Beijing and within the Taxand Global Alliance. Hendersen is the sole China member firm.