DALIAN, China -- Last December, an envelope arrived at Nanjing Sharp Electronics, the Chinese TV production arm of Japanese electronics company Sharp. Enclosed was a tax bill for around $85 million.
Nanjing Sharp Electronics The bill was assessed for alleged manipulation of transfer pricing. Local tax authorities objected to Sharp's practice of shifting ownership of all products made by Nanjing Sharp to a sales division set up in Shanghai in 2005, before releasing them for sale in the domestic market. "There is competition between local governments for a bigger piece of the pie," a Sharp official said. The company has vowed to contest the tax bill but has quietly set aside an extra $40 million, just in case.
