Advanced Pricing Agreements
An advanced pricing agreement (“APA”) is effectively a transfer pricing binding ruling entered into by taxpayers and competent authorities that addresses how the tax authorities agree to tax the various international related party transactions that are the subject of the APA. APAs apply prospectively, but can also be rolled back to cover prior periods. APAs can be entered into on a unilateral, bilateral or multilateral basis.
Seeking an APA can be an efficient strategy to either prevent or resolve transfer pricing disputes as an APA could assist you to:
- achieve greater certainty about your transfer pricing position (particularly relevant where there is uncertainty as to the attribution of profits, perhaps due to the presence of valuable intangibles or the uniqueness of a transaction). This will assist in avoiding any potential double taxation;
- deliver cost savings in managing your ongoing transfer pricing positions (avoiding audit and litigation costs (both fiscal and operational) as well as potential compliance penalties etc); and
- enabling you and your staff to concentrate your energies on your day-to-day activities.
The Crowe Horwath transfer pricing network has the experience and expertise to assist taxpayer’s in developing and securing APA positions and assisting to monitor the taxpayer’s ongoing compliance with the APA positions.