Advance Pricing Arrangement Agreement

PwC-Partner and Vordenker discuss and provide valuable insights into transfer pricing developments around the world. Our podcasts don`t just offer you… A pre-price agreement (APA) is an agreement that sets an appropriate rate of criteria ahead of controlled transactions to determine the transfer prices of these transactions over a specified period of time. It is an instrument for multinationals that manage and reduce transfer pricing risk on a forward-looking basis. The Pre-Price Agreement (APA) is a advance notice that gives companies legal certainty regarding their future transactions between two related companies. The Mutual Agreement Procedure (MAP), which is independent of internal remedies, aims to resolve situations of double taxation or situations in which taxation does not comply with a bilateral tax treaty. 6. The possibility of extending the provisions of an APA to a period ranging from the first day of the calendar year during which the subject first applied for an APA until the APA came into force if, after reviewing the first application, an APA was refused on the grounds that no agreement was reached between the tax authorities of a foreign counterpart. A pre-price agreement (APA) is a prior agreement between a tax payer and a tax authority on an appropriate transfer pricing method (TPM) for a number of transactions involved during a specified period[1] (“covered transactions”). An APA is a formal agreement between a subject and one or more tax authorities to determine and set transfer prices for transactions between the subject and its related parties.

APAs usually run five years or more with the possibility of extension and going back. The operation of the APA may depend on compliance with certain requirements and compliance with certain critical assumptions. If you have done so, we will be administratively bound by the provisions of the APA and we will not collect additional income tax on the basis of prices developed by the APA for covered cross-border transactions. 2. Allow the subject to enter into a unilateral APA if the Russian and foreign tax authorities do not reach a mutual agreement after consideration of a draft APP. The main benefits of an APA include: – the prevention of tax controls for APA-covered transactions (reducing costs and related efforts) and eliminating any transfer pricing adjustments: – removal of late interest and penalties for possible transfer pricing adjustments; Eliminating the costs of establishing the transfer pricing record for APA-covered transactions (during the period during which the APA is in effect); Avoid double taxation. The bill aims to optimize the procedure for concluding advanced price agreements (`APA`) in order to define the conditions under which transactions can be considered controlled and to introduce other specific amendments to the provisions of the Russian tax code.