Advance Payment Agreement

An advance pricing agreement (APA) is an ahead-of-time agreement between a taxpayer and a tax authority on an appropriate transfer pricing methodology (TPM) for a set of transactions at issue over a fixed period of time (called “Covered Transactions”). Most APAs involve U.S. taxpayers and the US Internal Revenue Service (IRS), but APAs are also made outside the United States. The concept was in the news recently. To know why it was in the click the above link titled ‘Related News’.

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