Articol de: Nilanjan Nag, Transfer Pricing Manager, PKF Finconta
Key points to consider while deciding whether to go for an APA or not
The following key points should be considered by a tax payer:
- Ongoing and expensive audit history;
- Nature of transactions being complex;
- Facts are expected to remain stable over a period of next few years;
- New transactions, proposed to be entered, which may give rise to litigation;
- Transactions entailing business restructuring.
Universal trends in Advance Pricing Agreements
- United States – In March, 1991 the Internal Revenue Service published Revenue Procedure that authorized APA contracts. The total number of APAs executed till date are more than 1500, with two-third of these being BAPAs.
- United Kingdom – The UK has formal APA procedures since 1999. During the last five years period around 170 APAs were agreed upon, with the total number of APAs applied for being in the region of 260.
- Canada – Canada started a formal APA program in July, 1995. Since the APA program was introduced more than 280 APAs have been concluded. The Canada Revenue Agency (CRA) has been actively engaged in bilateral or multilateral APA processes involving taxpayers from 15 different countries including the United States, the United Kingdom, Japan, Germany, India and China.
- China – By 31 December 2016, the cumulative total of APAs signed with the State Administration Of Taxation (“SAT”) was 139, 84 unilateral and 55 bilateral. Most of them were concluded within 2 years.
- Japan – The Japanese National Tax Administration Agency (NTA) actively encourages taxpayers to use APAs and has concluded the most number of APAs with a majority of these being BAPAs. Based on available data, around 400 BAPAs were concluded during the period 2013-15 and received 452 new requests for BAPAs for the same period.
- India – The Central Board of Direct Taxes (CBDT) has published the first India Advanced Pricing Agreement (APA) annual report in May 2017 which states that over 200 APAs have been concluded and around 1000 APA applications have been filed.
- Romania – At present the APAs concluded is not very significant in number. However, for the new APA applications BAPA applications have surpassed unilateral applications and is increasingly becoming popular with the Romanian multinationals. Unilateral APAs are issued for a term of 12 months, while bilateral and multilateral APAs are issued for a term of 18 months. According to the last available statistics from ANAF, during the year 2017, 5 Unilateral APAs were issued (as opposed to 1 Unilateral APA in 2016). Further during the year, 2017, 25 requests for APA were revised, out of which 14 applications were for Unilateral APAs and 11 were for BAPAs (with tax administrations from Germany, Switzerland, Greece, Luxembourg, and Sweden).
