ADVANCE PRICING AGREEMENT

advance  pricing  agreement.Tax.  A  usu.  binding  arrangement  made  between  a  multinational

company  and  one  or  more  national  tax  authorities  about  what  method  the  company  will  use  to

calculate transfer prices. • The agreement’s purpose is to reduce or eliminate double taxation. —

Abbr. APA.

bilateral advance pricing agreement.An advance pricing agreement made between a company

and two tax authorities.

multilateral  advance  pricing  agreement.An  advance  pricing  agreement  made  between  a

company and more than two tax authorities.

unilateral  advance  pricing  agreement.An  advance  pricing  agreement  made  between  a

company  and  one  tax  authority.  •  This  does  not  necessarily  allow  a  company  to  avoid  double

taxation. A tax authority that is not a party to the agreement is not bound by the transfer-pricing

method specified in the agreement. [Blacks Law 8th]