IEIM520200 | What is a ruling: Definition of an advance pricing arrangement

IEIM520200: What is a ruling? Definition of an advance pricing arrangement

BEPS Action 5 requires the exchange of unilateral APAs and advance thin capitalisation agreements (ATCA). The full guidance on APAs and ATCAs is in the transfer pricing guidance (INTM410000).

As a starting point you should assume that all APAs and ATCAs agreed by HMRC, fall within the OECD.

The definition of APA is that used in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations as:

'’… an arrangement that determines, in advance of controlled transactions, as appropriate set of criteria … for the determination of the transfer pricing for those transactions over a fixed period of time.’’

The same applies to APAs concerning the attribution of profit to permanent establishments (IEIM541320).

There is more guidance about transfer pricing in the International Manual https://www.gov.uk/government/collections/international-manual and advance pricing arrangements in the statement of practice https://www.gov.uk/government/publications/statement-of-practice-2-2010/statement-of-practice-2-2010.