In particular, the Transactional Net Margin Method was applied to the limited risk entities including limited risk distributors and limited risk sales support and operational support service providers, while the Resale Price Method was applied to the local distributors assuming greater local market risks.
Business · p. 152
Based on the analyses performed by our Transfer Pricing Consultant, our Directors are of the view and concur with the Transfer Pricing Consultant that, given the aforementioned transactions entered into during the Track Record Period fell within the interquartile ranges derived from the benchmarking analysis, (i) the transfer pricing risk of our Group during the Track Record Period was relatively low;
Business · p. 152
(ii) the Group had complied with the arm’s length principle as stipulated in applicable transfer pricing laws and regulations in the relevant jurisdictions during the Track Record Period and up to the Latest Practicable Date, and (iii) the risk of additional enterprise income tax liabilities arising from our transfer pricing adjustments was relatively low.
During the Track Record Period, we conducted our operations through subsidiaries in China and multiple overseas jurisdictions, with an aggregate intra-group transaction amount of RMB204.9 billion, RMB216.4 billion, RMB227.0 billion and RMB92.7 billion in 2023, 2024, 2025 and the four months ended April 30, 2026, respectively, to expand our operation in the international markets.
Business · p. 153
The estimated potential tax exposure after taking into account the effect of the double taxation agreements in respect to the Covered Transactions represented less than 0.5% of our profit before income tax in any given period during the Track Record period.
Business · p. 154
Based on the foregoing, our Directors and Transfer Pricing Consultant are of the view that (i) our Group’s transfer pricing arrangements for the Covered Transactions conducted during the Track Record Period complied with the OECD Transfer Pricing Guidelines in material respects and, where applicable, local transfer pricing regulations in relevant jurisdictions, and (ii) the risk for our Group to conduct material transfer pricing adjustment is relatively low.
Our major intra-group transactions primarily consisted of the intra-group supply of raw materials, finished products, fixed assets and technical support services among our PRC and overseas subsidiaries in Thailand and Seychelles.
Business · p. 146
We engaged an independent transfer pricing consultant to perform transfer pricing review on whether our major intra-group transactions during the Track Record Period were conducted on an arm’s length basis pursuant to the OECD Transfer Pricing Guidelines.
We conduct intra-group transactions among our subsidiaries.
Business · p. 177
Manufacturing business — between our Group and the Retained Sunny Optical Technology Group — Supply of products from the plant of Retained Sunny Optical Technology Group to the plants of our Group in China and Vietnam and the manufacturing entity supplying the products was selected as the tested party.
Business · p. 177
Based on the Transfer Pricing Advisor’s assessment of the Covered Transactions and the transfer pricing benchmarking analysis, which involved screening and evaluating comparable companies, the net profit margin levels of the relevant entities are reasonable and commensurate with their respective functions and risks.
Our transfer pricing policies are designed to ensure that our intra-group transactions are conducted on an arm's length basis and in compliance, in all material respects, with applicable transfer pricing laws and regulations in the jurisdictions where our Group operates.
Business · p. 147
Our Independent Transfer Pricing Consultant concluded that the transfer pricing policy in 2023, 2024, 2025 and the five months ended May 31, 2026 generally conforms to arm's length principle or does not give rise to material transfer pricing tax risks.
During the Track Record Period, our Company and our subsidiaries in the PRC and overseas jurisdictions (including the United States, Malaysia and Thailand) engaged in various intra-group transactions, such as, sales of products, provision of procurement support and other services, and intra-group financing.
Business · p. 163
Based on the benchmarking results for 2023, 2024, 2025 and for the six months ended June 30, 2026, the independent transfer pricing consultants concluded that the profitability of the Group’s major tested entities (including the PRC and overseas major operating entities) in respect of the controlled transactions under review generally fell within, or in some instances above, the interquartile range of the benchmarking results for the relevant periods.
Business · p. 164
As advised by the independent transfer pricing consultant, our Directors are of the view, and the Sole Sponsor concurs, that our Group’s intra-group transactions with transfer pricing arrangements during the Track Record Period complied in material aspects with applicable transfer pricing laws and regulations in the relevant jurisdictions.
We operate through subsidiaries in several jurisdictions, including Chinese Mainland, Hong Kong, Macau, the U.S. and Singapore.
Business · p. 176
Based on this analysis, the Transfer Pricing Consultant concluded that the profits earned by each of our relevant group entities for their functions performed were consistent with the arm's-length principle in all material respects.
Business · p. 178
During the Track Record Period and up to the Latest Practicable Date, we were not subject to any penalties, investigations, inquiries or transfer pricing audits carried out by local tax authorities in relation to these intra-group transactions.
During the Track Record Period, we conducted commodity trading through subsidiaries in the PRC and multiple overseas jurisdictions, including Singapore, Hong Kong, Vietnam and the U.S..
Business · p. 134
We have engaged an independent transfer pricing consultant (the “Transfer Pricing Consultant”) to review our intra-group transactions during the Track Record Period for compliance with the OECD Transfer Pricing Guidelines.
Business · p. 135
Based on its review, our Transfer Pricing Consultant is of the view that our intragroup transactions were in line with the arm’s length principle under the OECD Transfer Pricing Guidelines, which is generally followed by the applicable local laws and regulations related to transfer pricing in the relevant jurisdictions.
During the Track Record Period and up to the Latest Practicable Date, there were certain intra-group transactions among our Company and our subsidiaries to facilitate the respective function of our subsidiaries during the course of business of our Group.
Business · p. 162
Our transfer pricing advisor is of the view that (i) the pricing of our intra-group transactions aligns with the arm’s length principle in accordance with relevant regulations and guidelines, (ii) our tax exposure in relation to transfer pricing is limited, and (iii) our intra-group transactions are consistent with the functions performed, risks assumed, and returns earned by each relevant subsidiary.
During the Track Record Period, our intra-group cross-border transactions primarily included: (i) sales of products, mainly including PV inverters, energy storage batteries and environment management appliances, by our PRC subsidiaries to our overseas subsidiaries; (ii) provision of services, mainly including sales and marketing and after-sale services and business support services, by our overseas subsidiaries to our Company and our PRC subsidiaries.
Business · p. 180
In determining the pricing of our intra-group cross-border transactions, we take into account the function and risk profiles of the respective group entities in order to ensure the arm’s length nature of these transactions and compliance with transfer pricing laws and regulations of the jurisdictions in which such transactions are consummated.
Business · p. 181
After assessing our transfer pricing arrangements during the Track Record Period, our Directors are of the view, based on the advice provided by our Transfer Pricing Advisor, these transfer pricing arrangements were, in all material respects, broadly consistent with the arm’s length principle under both the OECD Transfer Pricing Guidelines and the relevant local transfer pricing laws and regulations in the applicable jurisdictions.
As confirmed by the Transfer Pricing Consultant, during the Track Record Period and up to the Latest Practicable Date, in respect of the intercompany transactions of (i) sales of semi-finished products and components, sales of finished optical transceiver products, and sales, administrative and R&D support services, based on the functions performed and risks assumed by the relevant entities participating in such intercompany transactions, the transactional net margin method was selected as the most appropriate transfer pricing method to assess the Group’s transactions; and (ii) licensing of intellectual property, the comparable uncontrolled price method was selected as the most appropriate transfer pricing method to assess the Group’s transactions.
Business · p. 185
Based on the assessment by the Transfer Pricing Consultant, the profitability or pricing of these intercompany transactions fell within the interquartile range derived from the respective comparable companies or comparable transaction agreements, and accordingly, the transfer pricing policies for such intercompany transactions were considered to be in compliance with the arm’s length principle.
Business · p. 186
According to our Transfer Pricing Consultant, no material transfer pricing risk has been identified for the intercompany transactions mentioned above.
Our intra-group transactions primarily include (i) purchase and sales of raw materials and finished goods, (ii) transactions of patent licensing, and (iii) intra-group services. We adopt the arm’s length principle for pricing intra-group transactions, with reference to applicable transfer pricing laws and regulations in the relevant jurisdictions and the OECD Transfer Pricing Guidelines.
Business · p. 177
Based on the benchmarking and review procedures performed, the Transfer Pricing Consultant concluded that our intra-group pricing during the Track Record Period was generally consistent with the arm’s length principle and that our overall transfer pricing adjustment risk is remote.
We have engaged Transfer Pricing Consultant to conduct a review of our intra-group transactions during the Track Record Period, which include (i) cross-border intra-group sales of IC substrates from the Company and Leading Qinhuangdao to Leading Taiwan, which in turn resold such products to thirdparty customers and retained a reasonable gross margin to cover its operating and selling expenses, with pricing determined to allow Leading Taiwan to retain such margin; (ii) sales of IC substrates between our manufacturing entities in the Chinese Mainland without a margin due to reasons such as customer designation; (iii) transfers of fixed assets, which were generally priced with reference to the net book value of the relevant fixed assets; and (iv) inter-company financing, with interest rates generally determined with reference to those applicable to similar financing arrangements during the same period.
Business · p. 159
The Transfer Pricing Consultant is of the view that the above-mentioned related-party transactions was generally consistent with the arm’s length principle and applicable transfer pricing regulations in Chinese Mainland and Chinese Taiwan, and there should be no material transfer pricing adjustment in the Track Record Period.
We operate through a network of PRC and overseas subsidiaries, which collaborate in the provision of our destination management services.
Business · p. 149
In connection with such intra-group collaboration, we have adopted internal pricing policies for relevant intra-group transactions with reference to the arm’s length principle.
Business · p. 149
We periodically review our internal pricing policies and transfer pricing documentation with reference to our business operations, functional profiles of relevant entities and applicable tax laws and regulations.
We have engaged an independent transfer pricing advisor, Ernst & Young (China) Advisory Limited Beijing Branch Office (the “Transfer Pricing Advisor”) to review and assess whether our Group’s intra-group cross-border transfer pricing arrangements meet the arm’s length principle based on Organization for Economic Cooperation and Development Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, 20 January, 2022 (“OECD Transfer Pricing Guidelines”).
Business · p. 181
Based on the above analysis, the Transfer Pricing Advisor is of the view that our pricing arrangements in relation to major intra-group cross border transactions have been carried out in line with the arm’s length principle under the OECD Transfer Pricing Guidelines, and there is no material transfer pricing risk identified in relation to Intra-Group Transactions of our Group during the Track Record Period.
Business · p. 182
If any competent tax authority in the Mainland China or overseas later determines that our transfer pricing arrangements do not comply with the relevant transfer pricing laws and regulations, we may face adverse tax consequences, including additional taxes, interests or penalties, which may result in a higher overall tax liability for us and may adversely affect our business, financial condition and performance.
We have engaged an independent transfer pricing consultant (the “Transfer Pricing Consultant”) to conduct transfer pricing analyses on intra-group transactions during the Track Record Period in accordance with the Organization for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (hereinafter referred to as the “OECD Guidelines”) and the relevant Transfer Pricing Regulations of of the jurisdictions where the Covered Entities are located.
Business · p. 140
Based on the results of analysis and after consulting with our Transfer Pricing Consultant, our Directors are of the view that our Transfer Pricing Arrangements during the Track Record Period were generally in compliance with the guidelines of Organization for Economic Cooperation and Development as well as applicable laws and regulations in the relevant jurisdictions in which the Covered Entities are located in all material respects.
Business · p. 140
We have implemented various internal control measures to ensure on-going compliance with the transfer pricing regulations under relevant jurisdictions, including (i) establishing group-wide transfer pricing policies in accordance with applicable laws and regulations, which set out the pricing principles and methodologies for intra-group transactions, (ii) conducting periodic benchmarking analyses, with the assistance of external advisers where appropriate, to ensure that the intra-group transactions are conducted on an arm’s length basis, (iii) implementing internal review and approval procedures for material intra-group transactions to ensure compliance with the transfer pricing policies, and (iv) regularly monitoring relevant regulatory developments and reviewing our transfer pricing arrangements on an ongoing basis.
We have engaged independent third party transfer pricing tax adviser, Shanghai Deloitte Tax Ltd. Suzhou Branch (“Transfer Pricing Tax Advisor”), to conduct benchmarking studies and to review whether our intra-Group transactions in relation to the provision of software products, semi/finished products, and various service are compliant with the arm’s length principle in accordance with the OECD TP Guidelines.
Business · p. 164
Based on the above analysis, it indicates that the profit level of the Company, the averaged profit level of RIGOL USA, the averaged profit level of RIGOL EU, the averaged profit level of RIGOL HK falls within the inter-quartile range on a weighted basis, established by the selected comparable companies.
Business · p. 165
During the Track Record Period and up to the Latest Practicable Date, we were not subject to any penalties, investigations, inquiries or transfer pricing audits carried out by local tax authorities in relation to these intra-Group transactions.
We have engaged an independent Transfer Pricing Consultant to perform transfer pricing review on our cross-border intra-Group transactions for the years ended December 31, 2024 and 2025, with no such transactions incurred in 2022 and 2023, to conduct benchmarking studies on the intra-Group transactions and ensure compliance with the relevant transfer pricing regulations and guidelines.
Financial Information · p. 235
Based on the analysis of the Transfer Pricing Consultant, the arrangement for the related-party transactions of cross-border purchase and sale of goods conducted by us was not inconsistent with the arm's length principle.
During the Track Record Period, we engaged in intra-group transactions primarily involving our Germany based design center, which primarily involved the provision of styling and design research and development services, the transaction amounts of which were not material.
Business · p. 167
Our Directors are of the view that (i) our transfer pricing arrangements during the Track Record Period were consistent with the functions performed, assets employed, and risks assumed by the relevant entities, and complied with the arm's length principle under the OECD Transfer Pricing Guidelines in material respects, and (ii) the risk for us to conduct material transfer pricing adjustment and pay additional tax can be considered as relatively low.
For the intra-group transactions between DKE Hong Kong and DKE Fushen, DKE Longning and DKE Fuyong, our transfer pricing consultant has adopted the transactional net margin method (“TNMM”) as the transfer pricing method for reviewing the Covered Transactions, selecting DKE Hong Kong as the tested party.
Business · p. 176
According to the analysis result of TNMM method, the weighted average profit level of DKE Hong Kong for the years ended December 31, 2022, 2023, 2024 and the six months ended June 30, 2025, fall within the inter-quartile range for the comparable companies.
Business · p. 176
Based on the above analysis, the transfer pricing consultant has stated that the transfer pricing arrangement related to the Covered Transactions for the period under review was consistent with the arm’s length principle.