Canada signed 31 advanced pricing arrangements (APAs) in FY 2014/2015, the most in five years, according to data released August 20 by the Canadian Revenue Agency (CRA). A total of 29 bilateral and 2 unilateral APAs were signed during the period.
Average time to complete a bilateral APA was 48.4 months, which is consistent with earlier periods.
Closing APA inventory was 94 APAs, a five-year low, down from a FY 2013/2014 inventory of 110 APAs.
The CRA accepted 22 new APA applications during FY 2014/2015; one APA was “unresolved” and therefore removed from inventory; and six APAs were withdrawn, meaning that the taxpayer was unable to continue with the APA process or the CRA decided the arrangement was not suitable for an APA.
Of the 94 pending APA cases in the CRA’s inventory, 53 are bilateral or multilateral APAs that involve the United States, while the other cases involve the UK, Switzerland, Japan, Germany, Sweden, South Korea, Netherlands, France, Austria, Ireland, China, Denmark, Portugal, and India.
The CRA also reported that, as in prior periods, the transactional net margin method (TNMM) is the most common transfer pricing method proposed. A TNMM was proposed in 62 percent of APAs in process. A profit split was the second most popular method, proposed in 13 percent of cases.
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