Studies On Unilateral Advance Pricing Arrangement System

Unilateral Advance Pricing Arrangement（APA）is a general term for the arrangements and the system formed by a series of activities and procedures between multinational taxpayers and tax authorities of a country on issues such as negotiation agreement,modification of the agreement,as well as follow-up supervision and audit adjustment on the adjustment methods of transfer pricing to be involved in controlled transactions between them and affiliated enterprises.It is an important policy tool for enterprises to reduce transfer pricing risks and obtain tax certainty.From different explanatory dimensions,China’s unilateral APA includes the narrow sense of "agreement" and the broad sense of "arrangement".In terms of nature,there are two main views in the academic field,namely the "civil contract theory" and the "administrative contract theory".Unilateral APA aims to achieve a "win-win" tax interest balance,which not only protects the necessary tax benefits of the state but also protects the legitimate rights and interests of taxpayers,and promotes the collaboration between tax authorities and taxpayers.Unilateral APA is an important policy tool for tax authorities to maximize the protection of national tax interests and prevent national tax loss and is an inevitable choice for taxpayers to safeguard their legitimate rights and interests and improve tax certainty.After more than 20 years of exploration,China’s unilateral APA legal system has formed a more comprehensive system,and the Announcement of the State Administration of Taxation on Matters Relating to the Application of Simplified Procedures for Unilateral APA Arrangement in 2020 marks the further improvement of the negotiation efficiency of unilateral APA in China,and the simplified procedures for unilateral APA have made significant adjustments in the operation process and negotiation time limit,which solves the problems of enterprises In the past,the process of applying for unilateral APA negotiation was cumbersome and took a long time to accept and review.The United States,Japan,and the Organization for Economic Cooperation and Development（OECD）,as typical countries and organizations implementing unilateral APA,have their legal systems with retroactive functions,detailed cost provisions,emphasis on legislation to protect taxpayers’ information,and perfect renewal provisions,which provide valuable experience for the construction of China’s legal system of unilateral APA.However,there are many problems in our legal system of unilateral APA,which should be improved from the following aspects: firstly,the content of unilateral APA agreement should be supplemented by adding key assumptions and clarifying the provisions of unilateral APA related costs;secondly,the negotiation procedure of unilateral APA should be optimized by simplifying the requirements of preparatory meeting documents and developing special procedures for small and medium-sized enterprises based on the historical experience of the U.S.again,the negotiation procedure of unilateral APA should be improved by strengthening the procedure of unilateral APA agreement.In addition,we will strengthen the binding force of the unilateral APA agreement,appropriately adjust the duration of the use of unilateral APA,and refine the legal liability provisions.In addition,it should improve the regulations on negotiation and coordination mechanism,provide for administrative reconsideration and administrative litigation to strengthen the construction of dispute resolution mechanism;finally,it should reasonably define the scope of information disclosure,limit the use of taxpayer information disclosure and improve the regulations on information protection.