Canadian use of APAs as a planning tool in the current economic climate

Transfer pricing remains one of the most important tax issues for multinational corporations today. Managing transfer pricing risk is, therefore, a key factor in corporate tax planning. Besides the general sources of transfer pricing risk, there are additional sources of such risk that are particular to current events. These include the recent downturn in the economy, new treaty legislations, new transfer pricing jurisprudence, changing financial reporting requirements, and the rapid development of transfer pricing rules in countries where transfer pricing was not a major concern in the past.

To mitigate these transfer pricing risks, one of the tools that can be used is the Advance Pricing Arrangement (“APA”) programme. This article describes these risks, lists the general advantages of APAs, and presents specific situations where APAs can be helpful in the current economic climate. Enjoying this article? To continue reading you need to take out a FREE trial to the Transfer Pricing Library.




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