The EU Arbitration Convention has introduced a procedure for settling transfer pricing disputes between Member States. These disputes relate to double taxation resulting from an upward adjustment of a company`s profits in one Member State, while in the other Member State no corresponding downward revision is followed. The agreement provides for a dispute resolution procedure, the first step of which is called the Mutual Agreement Procedure (POP). (ii) are not considered to be the expression of the person`s request to enter into an agreement. However, it is possible that a subject may be able to negotiate a unilateral APA involving only the taxpayer and the IRS. In this case, both parties negotiate an appropriate TPM only for U.S. tax purposes. If the taxpayer is involved in a dispute with a foreign tax authority over the registered transactions, he can apply for a discharge by asking the competent US authority to initiate a procedure of mutual agreement. This, of course, implies the entry into force of an applicable foreign income tax agreement. With the signing of these agreements, concluded in the first five months of these tax agreements, the total number of pre-price agreements signed so far by the CBDT is now 297, of which 32 are bilateral agreements (BAPAs).
The Organisation for Economic Co-operation and Development (OECD) defines an APA in its transfer pricing guidelines in the following terms – (iii) The adequacy of international transactions to the agreement; “An agreement that sets an appropriate rate of criteria for determining transfer prices for these transactions over a specified period of time ahead of controlled transactions.” In September 2019, three AAPAs (2 bilateral APAPs) were closed, bringing the total number of APAs signed by CBDT to 300. In the current budget, the total number of completed APAs has increased to 29 (27 unilateral APA and 2 bilateral APA). The bilateral APA, signed in September 2019, concerns the United Kingdom. (i) Not obliging the board or person to enter into an agreement or to initiate the contractual process This process is completely voluntary and is intended to complement complaints and other dispute resolution measures under the Double Taxation Agreement (DBAA) for the resolution of transfer pricing disputes. Bilateral and multilateral APAs are generally bilateral or multilateral, i.e. they also enter into agreements between the subject and one or more foreign tax administrations under the control of the Mutual Agreement Procedure (POP) under the tax treaties.  The subject benefits from such agreements, since he is assured that income from covered transactions is not subject to double taxation on the part of the IRS and the relevant foreign tax authorities. The IRS policy is to “encourage” taxpayers to apply for bilateral or multilateral APA where there are provisions of the competent authority.
The APA is an agreement between a tax payer and the tax administration of a state to create a prior guarantee with respect to the transfer pricing method. APAs simplify or prevent costly and time-consuming tax controls in contentious transactions. It determines in advance the price of the arm or determines how the price of an international transaction is determined. And these prices are valid for the period indicated in the APA. A pre-price agreement is a contract between the CBDT and any other unit or individual. This is an agreement between the Board of Directors and the applicant, which is neither bilateral nor multilateral.