The US IRS on September 26 proposed revisions to the template used to draft advance pricing agreements with multinational group taxpayers. The IRS is has also provided a filled in example of the new advance pricing agreement template and is seeking feedback on these draft changes by October 31.
Advance pricing agreements are agreements set between a multinational taxpayer and one or more tax authorities establishing the multinationals’ transfer pricing, namely, the pricing of cross-border transactions conducted between group members. These agreements can help establish how much of an MNE’s income should be allocated to a particular country.
This IRS said the draft advance pricing agreement template makes substantial changes and is much longer than the prior version. It presents a menu of options for selection, covering a wide range of situations and thus minimizes the need for custom drafting and negotiation of an advance pricing agreement.
The new draft also includes greater detail on topics such as financial statements, conforming adjustments, and early termination of an advance pricing agreemment.
Further, Appendix A, addressing covered issues, covered methods, income reporting, and conforming adjustments, and Appendix B, addressing critical assumptions, are written to be easily adapted for use in a competent authority mutual agreement if a treaty partner is willing to use them, the Service said.
Comments should be sent to [email protected] with the subject line “comments,: and should be in narrative form rather than as a markup.
Dear all,
thank you for the relevant information. I would like to know if the draft faces that USA has managed an average timeline of 34 months for unilateral APAs and 51 months for bilateral APAs in 2016.
Thank you,
Jaqueline