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Renewal Of Advance Pricing Agreement

By Zach Arnold | April 11, 2021

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Tax authorities may not always be in line with your company`s pricing agreements and policies, which can lead to audits and adjustments. Economic double taxation can also have the effect of making adjustments in one country, without proper adjustment in the other jurisdiction. Uncertainty related to these issues can make it more difficult for your group to manage its effective tax rate and result in greater tax risk than expected. The Pre-pricing Program (APA) is an important part of our compliance assurance strategy. The AAAs offer you the opportunity to reach an agreement with us on the future application of the principle of arm length to your relations with international relatives. The operation of the APA may depend on compliance with certain requirements and compliance with certain critical assumptions. If you have done so, we will be administratively bound by the provisions of the APA and we will not collect additional income tax on the basis of prices developed by the APA for covered cross-border transactions. APAs provide a mechanism to manage and reduce your transfer pricing risk by providing greater security on a prospective basis. The launch of an APA fosters constructive cooperation based on mutual trust, based on early engagement and full and open disclosure throughout the development of the APA. Entering an APA reduces the potential for double taxation in your secret cross-border transactions.

An APA is a formal agreement between a subject and one or more tax authorities to determine and set transfer prices for transactions between the subject and its related parties. APAs usually run five years or more with the possibility of extension and going back. PwC-Partner and Vordenker discuss and provide valuable insights into transfer pricing developments around the world. Our podcasts don`t just offer you… The APA generally extends over a period of three to five years and can be reviewed if business circumstances change significantly. APAs are also subject to an annual reporting requirement.

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