On 22 February 2024, the Canada Revenue Agency (CRA) released the Information Circular 94-4R2 on International Transfer Pricing: Advance Pricing Arrangements (APAs). This circular offers detailed guidance on APAs, focusing on the prerequisites for taxpayers to participate in the APA program.
The APA program has, therefore, become a key tool for the CRA in making compliance easier. Through the program, taxpayers are allowed to collaborate with the CRA and other tax administrations on a constructive and cooperative basis to achieve tax certainty on complex transfer pricing issues.
The APA program also allows taxpayers to openly discuss the challenges they face in trying to comply with transfer pricing requirements of multiple tax jurisdictions. Prospective tax certainty provided through the APA program contributes to the effective application of Canada’s tax treaties, which helps reduce barriers to trade and investment.
This information circular provides comprehensive guidance on APAs with a specific focus on establishing what is required from taxpayers to enter the APA program and the criteria used by the CRA in assessing whether taxpayers and transactions are suitable for an APA. This guidance aims to increase transparency concerning the CRA’s APA program by offering clear direction to taxpayers on the APA process and program requirements.
The information circular includes the sections as follows:
- Part I – Information about APAs;
- Part II – Prefiling meeting;
- Part III – Processing an APA request;
- Part IV – Case work and resolution;
- Part V – Other issues: Canada-United States arbitration;
- Part VI – Legal effect;
- Part VII – Use, disclosure, and protection of information;
- Part VIII – Administering an APA;
- Part IX – Other APA requests.
