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Transfer Pricing – News

Transfer Pricing Audit Roadmap Now Available

The Transfer Pricing Operations (TPO) of the Large Business and International (LB&I) division of IRS has released the Transfer Pricing Audit Roadmap to the public. The Transfer Pricing Audit Roadmap (Roadmap) is a practical, user-friendly toolkit organized around a notional 24 month audit time-line.

The Roadmap provides recommended audit procedures and links to useful reference material. It is not intended as a template. Every transfer pricing case is unique and requires ongoing exercise of judgment and discretion. With the release of the Roadmap, TPO is providing the public with insight into what to expect during a transfer pricing examination. This transparency is intended to help improve communications and efficiency, for the benefit of both the IRS and taxpayers.

The Roadmap is a “living document”. TPO will continue to review the Roadmap and make changes over time as new techniques arise or additional reference materials become available. Users are encouraged to contact the TPO to provide any input, feedback and suggestions for improvement.

Page Last Reviewed or Updated: 18-Feb-2014

APMA Reports on 2013 APAs

During 2013, the APMA Program continued to benefit from the merger and processing efficiencies that began in 2012. For the second year in a row, the number of executed APAs increased (from 140 in 2012 to 145 in 2013). The median completion time fell from 39.8 months in 2012 to 32.7 months in 2013. The increase in efficiency is further illustrated by the fact that the number of executed APAs (145) again surpassed the number of applications filed (111).

Part I of this report includes information on the structure, composition, and operation of the APMA Program; Part II presents statistical data for 2013; and Part III includes general descriptions of various elements of the APAs executed in 2013, including types of transactions covered, transfer pricing methods used, and completion time

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Changes to APA and LOB User Fee Filing Procedures

APA USER FEES

On December 31, 2012, the Advance Pricing and Mutual Agreement (APMA) Program will begin using the Pay.gov website to receive Advance Pricing Agreement (APA) user fee payments. Use of the Pay.gov website will replace the mailing or hand delivering of user fees (with the requisite cover letter) specified in Section 4.11, paragraph (1), of Revenue Procedure 2006-9. The use of the Pay.gov website to submit APA user fees will be mandatory. All user fee checks mailed or hand delivered after December 28, 2012 will be returned, and the taxpayer will be requested to submit the fee through the website.

Payments made through the website are electronic and require the taxpayer’s bank routing number and account number. To submit a user fee, visit www.pay.gov and use the IRS APMA Program Advance Pricing Agreement User Fee form. This form can be found by entering “APMA” in the “Search the Forms” box or by clicking on the “Agency List” link under “What Federal Agencies Can I Pay?” and choosing Internal Revenue Service.

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China - Tax authorities focus on related-party service fees, royalties

KPMG reports that:

China’s tax authorities are surveying taxpayers that made service fees and royalty payments to their foreign related parties during years 2004-2013. As a result of these surveys, transfer pricing audits may potentially be triggered with respect to these related-party transactions.

The State Administration of Taxation instructed tax bureaus across China to survey and report back to it in September 2014 regarding companies within their jurisdictions that made service fees or royalty payments to related parties between 2004 and 2013. These years are eligible for potential tax adjustments because the statute of limitations for transfer pricing in China is 10 years.

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