China recently signed unilateral Advance Pricing Arrangements (APAs) with two companies located in the Jiangsu Province and the Guangdong Province, respectively. These were the first two signed unilateral APA cases under the simplified procedures in China since the Public Notice on Matters Regarding the Application of Simplified Procedures of Unilateral Advance Pricing Arrangements - STA Public Notice [2021] No. 24 (Public Notice 24) became effective. The two cases took four months from application to formal signing, providing the companies with tax certainty on their transfer pricing arrangements in a quick and efficient manner.
The introduction of the simplified procedures for unilateral APAs represents an important step by China's tax authorities to continuously expand the benefits and radiating effects of the APA services, and to promote a taxation environment intended to benefit both the tax authorities and enterprises. Enterprises should assess the feasibility of the simplified procedures for unilateral APAs to mitigate transfer pricing risks arising from the COVID-19 pandemic and from global trade uncertainties. Enterprises can also benefit from the convenience and tax certainty brought by the simplified procedures of unilateral APAs.