Tag: Revision of APA

OECD COVID-19 TPG paragraph 99

In 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 the period of the APA, rather than on an annual basis, i.e. a “term test”. This approach would aggregate the financial results of FY2020, which may be exceptional, with the more normal results of prior and future years. In combination with this, tax administrations could also consider extending the period covered by an APA. Tax administrations could consider segregating the terms of the APA between financial years affected and unaffected by COVID-19, or cancelling an existing APA for FY2020 and then renewing the APA in a future period, potentially on revised terms. Alternatively, tax administration could also consider aggregating the financial results from a series of covered transactions covered separately under an APA and assessing whether on ... Read more

OECD COVID-19 TPG paragraph 98

In some circumstances, it may be possible to retain some of the terms set out in an APA, but revise specific provisions for which the breach in the critical assumptions is relevant. For example, an APA may cover a series of controlled transactions for which the agreed methodology for only one specific transaction required revision ... Read more

OECD COVID-19 TPG paragraph 97

Revision would be the appropriate response where there has been a material change in conditions noted in a critical assumption in the APA and the tax administration and the taxpayer agree on how to revise the APA.51 The revision of an existing APA would have the effect of changing the previously agreed terms of an APA. Under this approach, it is likely that the original terms of the APA would remain in force for the period up to FY2020, with revised terms applying for FY2020 and any subsequent year(s) subject to the economic circumstances derived from the COVID-19 pandemic. 51 Paragraphs 83 and 85 of Annex II to Chapter IV of the OECD TPG ... Read more