Announcement 2021-6: APMA program, APA statistics for 2020

APMA program, APA statistics for 2020

The IRS today released an advance version of Announcement 2021-6 providing the Advance Pricing and Mutual Agreement (APMA) program’s annual report on advance pricing agreements (APAs) for 2020.

1000

Related content

This is the 22nd report describing the experience, structure, and activities of the APA program. This report does not provide guidance regarding the application of the arm’s length standard.

Announcement 2021-6 [PDF 2.48 MB] reports that:

  • The number of executed APAs in 2020 was 127.
  • In 2020, the percentage of renewals executed was 59% (compared to 57% in 2019).
  • As in prior years, more than half of the APAs executed in 2020 involved transactions between non-U.S. parents and U.S. subsidiaries.
  • Although most of the transactions covered in APAs executed in 2020 involved the sale of tangible goods or the provision of services, approximately 25% involved the use of intangible property (noted by the IRS to be among the most challenging transactions in the APMA’s inventory).
  • The median completion time for new APAs and renewed APAs combined was 32.7 months (unilateral and bilateral APAs). Thus, the median time required to complete an APA continued to decrease from 38.8 months in 2019 and 40.2 months in 2018.

APA statistics for 2020

 

Unilateral

Bilateral

Multilateral

Total

Applications filed

15

103

3

121

APAs executed

19

105

3

127

APAs pending as of December 31, 2020

43

384

21

448

Renewals executed in 2020

11

64

0

75

Renewals pending as of December 31, 2020

25

154

8

187

Revoked or cancelled in 2020

0

0

0

0

Applications withdrawn in 2020

2

5

0

7

KPMG observation

Despite the coronavirus (COVID-19) pandemic and the uncertainty it caused for businesses throughout 2020, the APA statistics for 2020 are generally consistent with those for 2019. New APA applications held steady, and slightly more APAs were executed than in 2019, indicating that APMA and its treaty partners quickly and successfully adapted to work in a virtual environment.

Importantly, no APAs were canceled in 2020. An APA may be canceled when a critical assumption is no longer met unless the parties agree to revise the APA’s terms. While the pandemic may have resulted in critical assumption failures, the lack of any cancelations suggests that APMA and foreign competent authorities have been able to work through COVID-related issues with taxpayers.


For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services group in the United States:

Mark Martin | +1 (713) 319-3976 | mrmartin@kpmg.com

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal