On 23 March 2021, the US IRS released an advance version of Announcement 2021-6 regarding the Advance Pricing and Mutual Agreement (APMA) program’s annual report on advance pricing agreements (APAs) for 2020.

This twenty-second report describes the experience, structure, and activities of the APMA Program during calendar year 2020. It does not provide guidance regarding the application of the arm’s length standard.

In 2020, the number of executed APAs was 127, an improvement over the annual output of the previous six years. A total of 120 APAs were executed in 2019, 107 in 2018, 116 in 2017, 86 in 2016, 110 in 2015, and 101 in 2014. In 2012 and 2013, the IRS had a higher yearly output, with 140 and 145 APAs executed in those years, respectively. In 2020, the percentage of renewals executed was 59% (compared to 57% in 2019). Although most of the transactions covered in APAs executed in 2020 involve the sale of tangible goods or the provision of services, approximately 25 percent of transactions covered in APAs executed in 2020 involve the use of intangible property, which can be among the most challenging transactions in APMA’s inventory. The median time required to complete an APA continued to decrease in 2020 to 32.7 months (from 38.8 months in 2019 and 40.2 months in 2018). In 2020, the most commonly used transfer pricing method (TPM) for both the sale of tangible property and the use of intangible property continued to be the comparable profits method/transactional net margin method (CPM/TNMM). The CPM/TNMM was used for 84 percent of transfers of tangible and intangible property.