In 2019, the U.S. IRS has signed 120 pre-price agreements (APAs), increasing its annual output from the previous five years, according to IRS statistics released April 6. Agnes Lo, Associate Professor of Teaching, Lingnan University, Hong Kong, and Raymond Wong, Associate Professor, City University of Hong Kong, discuss a report by the Chinese Tax Administration on October 29, which provides statistics on China`s pre-price program until 2019 . . . The IRS APMA program is operational independently of the audit function, but it has been part of the LB-I division since 2012, with the same notification lines as the test. In particular, the Director of APMA reports to the Director of Processing and Transfer Operations, who also oversees IRS transfer practices, who supports pricing transfer reviews. Does the country have a pre-price program (APA)? If so, is the program widespread? Are there unilateral, bilateral and multilateral APAs? APAs may cover transfer prices for transactions with all related parties, including transfers of intangible assets and assets, intercompany services, CSAs and financial transactions, including guarantees and income allocation of a financial institution involved in the global trading of financial instruments. In addition to traditional transfer pricing issues, ASAs may also cover some other tax issues for which compensation principles may be relevant, as well as incidental issues. The subjects initiate the APA collection procedure by submitting an APP application to the APMA program, which meets the substantive requirements of the 2015-41 collection procedure. The APA application should normally be filed until the taxpayer files his or her income tax return for the first tax year of the APA. However, a policyholder may obtain a 120-day extension to file an APA application by paying the applicable user fee (see below).
Bilateral and multilateral APA applications must be filed with the relevant foreign tax authority within 60 days of the application date of the APP application. The APP application contains, among other substantive and procedural requirements, a comprehensive functional and factual analysis and proposals for one or more covered transactions, transfer pricing methods (and economic analyses in support of these methods), critical assumptions and a concept of APP. APA usage fees increased to $113,500 as of January 1, 2019. Renewal AAS and some APAs for small businesses are subject to reduced preferential rates.