Advance Pricing Agreements

Advance Pricing Agreements (“APA’s”) are intended to supplement traditional administrative, judicial, and treaty mechanisms for resolving transfer pricing issues. This is an arrangement in which tax payers and tax authorities agree on transfer or pricing methods. These methods are used to determine the appropriate arm’s length compensation for the taxpayer’s intercompany transactions for a predetermined period of time. APA’s are entered into by entered into by a multinational taxpayer and at least one government’s administration.

The following questions have been addressed in this article:

What is an Advance Pricing Agreement?
What is the legal effect of Advance Pricing Agreement (APA)?
Where does a tax payer send a pre-filing submission?

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