Advance Pricing Agreement Annual Report 2018

If you have any comments or questions regarding this report or the services offered by the competent authority`s services department, please contact the division: on 31 December 2018, 19 applications for inclusion in the programme were examined (d.b. in the event that a pre-queue meeting took place between the CRA and a taxable person, however, a taxable person had not yet submitted the APA filing). About 52% of the SAAs carried out in 2018 were concluded with companies with a foreign parent company, while 22% were concluded with US parent companies.2 The 240 unilateral APAs gave taxable persons a tax guarantee of 1553 years. This covers 404 years covered by the return period of closed ASAs. Of the 240 agreements, 113 agreements have a return period. The 41 agreements concluded in 2018-19 offer 269 years of tax security, including 72 years of going back. The following tables and graphs show the country distribution of bilateral ABS applications filed in 2018-19 and cumulatively between 2012-13 and 2018-19. In the early years of the APP program, Britain (UK) and Japan topped the list due to a lack of a bilateral ABS program with the United States of America (United States). However, when the U.S. opened its bilateral APP program with India in February 2016, bilateral APAS applications arrived between India and the U.S. A combination of new applications and unilateral to bilateral conversions put the number of applications in the lead with the United States. During the negotiation phase (only for bilateral and multilateral ABS), the credit rating agency conducts government-to-government negotiations with the corresponding foreign tax administration with a view to concluding an agreement on the transfer pricing approach and methodology to be used for the duration of the ABS.

This may often require more analysis, research and factual research in order to resolve the differences between the transfer pricing positions of the CRA and those of a foreign tax administration. As the chart below shows, SAAs with Japan account for more than any other country, with 39% of bilateral APAs achieved in 2018. This is due to the maturity of APA programs in the U.S. and Japan, as well as the negotiating experience of the APMA team and the competent authorities team, which represents the National Tax Administration of Japan. This year`s APA report is the 17th of its kind released by the CRA on the APA program. The report is aimed at taxpayers, tax officials and international tax administrations. The main objectives of this report are as follows: the most widely used transfer pricing method to achieve security with an APA for the covered international transaction is the transactional Net Margin Method (TNMM), which emerges from the data contained in the APA report. The data shows that TNMM was used in 116 out of 164 transactions covered by the APA program through August 31, 2018. 1 EY manages about 35% of total bilateral SAAs with India and concluded the first bilateral ABS between the US and India in January 2018.

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