Despite these potential challenges, the value of achieving advanced certainty and effective dispute prevention through APAs remains compelling. A number of tax administrations and taxpayers have identified a variety of ways to adapt working practices in order to overcome any practical impediments to working APAs. Tax administrations and tax payers should recognise that rigid adherence to pre COVID- 19 working practises may unduly lead to significant delays in APA negotiations. Instead, innovative and flexible approaches to ensure collaborative working in order to minimise delays in concluding APAs under negotiation should be encouraged.
OECD COVID-19 TPG paragraph 111
Category: TPG2020 Guidance on the transfer pricing implications of the COVID-19 | Tag: Advance pricing arrangement (APA), COVID-19
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- OECD COVID-19 TPG paragraph 99In other circumstances, more general revisions may be required, depending on the specific facts and circumstances of a case, where allowed by domestic law. For example, tax administrations could consider evaluating the results of the transfer pricing methodology specified by the APA over...
- OECD COVID-19 TPG paragraph 107However, tax administrations are likely to respond differently to the failure to comply with the terms and conditions of an existing APA, than to the failure to meet critical assumptions.55 This may reflect differences in the procedures prescribed by an APA agreement, domestic...
- OECD COVID-19 TPG paragraph 108In the current environment, taxpayers may be reluctant about continuing or initiating new APA applications. This is understandable given the significant level of economic uncertainty that many businesses face, uncertainty that for some taxpayers may mean it is not feasible to reach agreements...
- OECD COVID-19 TPG paragraph 109Where taxpayers and tax administrations are negotiating APAs that are intended to cover FY2020, all parties are encouraged to adopt a flexible and collaborative approach to determine how to take into account the current economic conditions, and the various options discussed above in...
- OECD COVID-19 TPG paragraph 110The COVID-19 pandemic also presents practical difficulties for tax administrations and taxpayers currently negotiating APAs. Potential challenges may arise for a number of reasons including restrictions on domestic and international travel; enforced or voluntary working from home; or additional resource pressures as a...
- OECD COVID-19 TPG paragraph 112A range of technological solutions are available to replace and/or complement, traditional methods of communication, such as face-to-face meetings and the exchange of physical documentation, while maintaining confidentiality and security requirements. There may be situations where flexible approaches are not readily identifiable or...