Pm 3110 Case Study 14.1

Karsts are distinctive landforms and hydrological systems formed by the dissolution of highly soluble and porous bedrock (e.g., carbonate rocks such as limestone) with geological ages ranging from the Cambrian to the Quaternary (Ford and Williams2007). Around the world, carbonate rocks cover ca. 11% of world’s land surface; however, with the expansion of subterranean hydrological systems, the karst realm makes up more than 14% of the global land areas (Williams2008). With more than 800,000 km2, Southeast Asia and southern China contain the most extensive limestone karsts on earth (Gillieson2005). In particular, the vast karst terrain stretching across the Sino-Vietnamese bordering region (southern China [Guangxi, western Guangdong, southern Guizhou, and southeastern Yunnan] and northern Vietnam; Xu et al.2012a), renowned for spectacular landscapes of fengcongs (cone karst; Waltham2008), fenglins (tower karst; Waltham2008), and caves, is the largest area on earth with pure carbonate bedrock (Xu1995) and has been considered as the model for karst studies (Sweeting1978).

Behind these picturesque landscapes, limestone karsts of SE Asia and southern China also abound in rich and marvelous flora with strikingly morphological variation and exceedingly high endemism (Xu1995; Clements et al.2006; Zhu2007). In China, 61 of the ca. 250 Chinese endemic plant genera occur solely in Guangxi (Qin and Liu2010), a majority of which are associated with the limestone ecosystem. Of the ca. 470 species (58 genera) of Gesneriaceae recorded from China, at least 200 species (41 genera) are found in Guangxi, with most species confined to limestone karsts. Among them, ca. 100 species and 10 genera are endemic to Guangxi (Qin and Liu2010). Of the 18 Begonia L. species from Sabah, Borneo associated with limestone substrates, 12 (67%) are only known from a single locality (Kiew2001). In Kuching (Sarawak, Boreno), all 15 limestone Begonia species are endemic to the local hills only (Kiew2004).

Despite their remarkable biodiversity, however, a great proportion of karsts remain to be explored and very little is known regarding the evolutionary processes that have generated the marvelous floras on these limestone landscapes (Clements et al.2006). Since Begonia is one of the best represented plant groups on tropical limestone karsts (Clements et al.2006), it provides an important model for understanding the role that limestone karsts have played in generating high species diversity and endemism.

With recent estimates ranging from ca. 1500 (e.g., Goodall-Copestake et al.2010; Thomas et al.2011a) to more than 1600 species (Hoover et al.2004), the pantropically distributed Begonia sits firmly as one of the ten most species-rich flowering plant genera (Frodin2004). However, despite their almost ubiquitous presence in the tropical and subtropical forest ecosystems across Africa, America, and Asia, with few exceptions (e.g., B. grandis Dryand., B. longifolia Blume, and B. palmata; Gu et al.2007), most Begonia species have very narrow distribution ranges (Tebbitt et al.2006; Hughes and Hollingsworth2008) and single-site endemic species are common, especially in the limestone karsts (e.g., Kiew2001; Peng et al.2008b; Dewitte et al.2011).

Begonia taxonomy is notoriously challenging because of the genus’ enormous size and often poorly preserved morphological characters in herbarium specimens (Hoover et al.2004; Hughes and Girmansyah2011), generating great obstacles for further studies. To deal with the unwieldy number of species in the genus, sectional classifications have long been adopted (Doorenbos et al.1998; Ku1999; Shui et al.2002; Kiew2005; Gu2007). Traditionally these infrageneric classifications have relied primarily on morphological and anatomical characters of fruits and ovaries, with each of the ca. 70 recognized sections confined to one continent only (Doorenbos et al.1998), with one known exception (B. afromigrata J.J. de Wilde, sect. Tetraphila; de Wilde et al.2011).

With more than 760 species currently known, Asia harbors the greatest species diversity of Begonia (Rajbhandary et al.2011; Thomas et al.2011a). In the past decade renewed interest and ongoing explorations to under-collected regions have resulted in the description of more than 140 new species in Asia (e.g., de Wilde et al.2011; Thomas et al.2011b; Averyanov and Nguyen2012; Peng et al.20122013). Traditionally these Asian species are classified into 22 sections of highly unequal sizes (Doorenbos et al.1998; Shui et al.2002; Gu2007; Hughes and Pullan2007; Kiew2005; Thomas et al.2011a), with eight of the largest sections: sect. Coelocentrum Irmsch., Diploclinium (Lindl.) A. DC., Petermannia (Klotzsch) A. DC., Platycentrum (Klotzsch) A. DC., Parvibegonia A. DC., Reichenheimia (Klotzsch) A. DC., Sphenanthera (Hassk.) Warb., and Symbegonia (Warb.) L.L. Forrest & P.M. Hollingsworth, accounting for 95% of the species diversity (Thomas et al.2011a). However, recent molecular phylogenetic analyses have demonstrated the paraphyly (sect. Platycentrum and Petermannia) or polyphyly (sect. Diploclinium, Leprosae, Reichenheimia and Sphenanthera) of most big sections (Tebbitt et al.2006; Thomas et al.2011a), indicating the homoplasious or plesiomorphic nature of those morphological characters long emphasized in sectional classification (Tebbitt et al.2006; Thomas et al.2011a).

Based on recent treatment of Begoniaceae in the Flora of China (Gu et al.2007) and subsequent studies (Liu et al.2007; Peng et al.20072008a,b20122013; Li et al.2008; Shui2007; Wei et al.2007), ca. 170 species of Begonia assigned to 9 (Shui et al.2002) or 7 (Gu2007) sections are currently known from continental China, with sect. Coelocentrum (47 spp.), Diploclinium (41 spp.), and Platycentrum (62 spp.) accounting for the majority (88.6%) of the species diversity. Among these, ca. 60 species (35% of the Begonia diversity in China) are known primarily from limestone substrates in Guangdong (1 species), Guangxi (44 species), Guizhou (3 species) and Yunnan (19 species) provinces (Gu et al.2007; Liu et al.2007; Peng et al.20072008a,b201020122013). These limestone begonias include one species of sect. Alicida C.B. Clarke (B. peii; Shui et al.2002), four species of sect. Diploclinium (B. cavaleriei H. Lév. [Guangxi, Yunnan, Guizhou], B. grandis Dryand. [widespread across eastern China], B. pulvinifera C.I Peng & Y. Liu [Guangxi], and B. wangii; Gu et al.2007), three species of sect. Platycentrum (B. psilophylla Irmsch. [Yunnan], B. rubropunctata S.H. Huang & Y.M. Shui [Yunnan], and B. subhowii; Shui et al.2002), two species of sect. Leprosae (T.C. Ku) Y.M. Shui (B. cylindrica D.R. Liang & X.X. Chen [Guangxi] and B. leprosa Hance [Guangdong, Guangxi]), one species of sect. Petermannia (B. sinofloribunda; Shui and Chen2004), three species of sect. Reichenheimia (B. chingii Irmsch. [Guangxi], B. lithophila C.Y. Wu [Yunnan], and B. parvula; H. Lév. & Vaniot [Yunnan]; Shui et al.2002), and all 49 species of sect. Coelocentrum (Gu et al.2007; Ku et al.2008; Liu et al.2007; Peng et al.2008a,b20122013).

Morphologically well circumscribed by its parietal placentation and rhizomatous perennation (Shui et al.2002; Gu et al.2007), Begonia sect. Coelocentrum is one of the most characteristic limestone plants confined to cave-like microhabitats (i.e., caves, crevices, and fissures) of the Sino-Vietnamese karst region (Peng et al.2008a; Qin and Liu2010), with most species known from a single or a few localities and differing from one another by leaf shape, pubescence, texture, and variegation (Gu et al.2007). In the past decade, explorations and taxonomic studies in the region have more than tripled the number of species in this section from 15 (Ku1999) to over 50 (Gu et al.2007;Liu et al.2007; Ku et al.2008; Peng et al.20072008a,b20122013; Averyanov and Nguyen2012;), representing a remarkable example of species radiations across the Sino-Vietnamese limestone karsts comparable to those on oceanic islands and tropical high mountains (Rundell and Price2009).

Given the sectional classification schemes, it is tempting to speculate that Begonia should have adapted to the limestone substrates at least seven times in China. However, Chinese Begonia species, especially those found on limestone substrate, were very poorly sampled in recent phylogenetic analyses (Tebbitt et al.2006; Rajbhandary et al.2011; Thomas et al.2011a2012). For example, despite its high diversity, only two species of sect. Coelocentrum were sampled in the studies by Thomas et al. (2011a2012) and its relationships to other limestone Begonia in the region remain to be explored. Additionally, although sect. Diploclinium and Platycentrum, both major representatives of Chinese Begonia, have been proven non-monophyly (Thomas et al.2011a), it remains unclear as to what extent the infrageneric taxonomic framework of Chinese Begonia has to be revised, and what mechanisms could have been responsible for the high Begonia diversity on the Sino-Vietnamese limestone karsts.

This article studies phylogenetic relationships of limestone Begonia of Sino-Vietnamese karsts and concurrently evaluate the monophyly of major Begonia sections present in China. To gain further insights into the history of Begonia diversification, molecular divergence time estimates are also performed. This study focuses on continental Asian Begonia species, complementing recent studies by Thomas et al. (2011a2012) that emphasized the evolutionary patterns of SE Asian Begonia.

In recent years, transfer pricing of multinational companies has become a new challenge for customs authorities in many countries. It also becomes a hot topic when WCO conducts technical research on valuation matters. WCO issued the WCO Guide to Customs Valuation and Transfer Pricing in June 2015, followed by Case Study 14.1 in April 2016 and Case Study 14.2 in October 2017. The issuance of the documents reflects the attention of WCO Technical Committee on transfer pricing and indicates that related party transactions have drawn the attention of all countries (especially emerging countries such as China).

This Case study, conducted and drafted by the PRC Technical Committee on Customs Valuation (international team), aims to explain how the Customs applies transfer pricing documentation and other relevant information to ascertain whether the prices paid or payable of imported goods have been influenced by any special relationship between the buyers and the sellers (based on Article 1.2(a) of the Agreement).

With the Customs paying increasing attention to transfer pricing arrangements, we suggested that enterprises should consider doing the following:

  • The transfer pricing policy of most trading companies in China is modelled on Resale Price Method (“RPM”) or Transaction Net Margin Method (“TNMM”) and their testing indicator on operating margins or similar financial indexes. However, due to the significant attention of the Customs paid to gross margins, it is suggested that an analysis be conducted on gross margins when preparing transfer pricing documentation;
  • Special factor analysis (e.g. industry analysis, financial analysis and adjustments) should be conducted if the profit is lower than the inter-quartile range in transfer pricing documentation. Considering the difference in a customs valuation review, it is recommended that special circumstances be analysed if the profit is higher than the inter-quartile range;
  • When submitting the transfer pricing documentation to the Customs, companies should provide proper explanations regarding the applicability of the documentation to avoid any misunderstanding of the information disclosed and methods applied in the documentation by the Customs;
  • It is recommended that a Customs valuation report be compiled with reference to the transfer pricing documentation prepared for tax purposes. Such a report should use customs valuation language and logically present a comprehensive study by consolidating the information and materials that are required to be submitted to the Customs.

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