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August 31, 2021

Mainland China simplifies application procedures for unilateral advance pricing arrangements

Executive summary

To further alleviate tax administrative burdens of enterprises engaging in cross-border business activities in Mainland China, on 26 July 2021, China’s State Tax Administration (STA) issued STA PN [2021] No. 24 (STA PN 24) providing simplified application procedures (simplified procedures) for unilateral advance pricing arrangements (APA).

STA PN 24 is effective from 1 September 2021. It is anticipated that the simplified procedures will enhance the efficiency of unilateral APA negotiations for qualifying enterprises and will likely reduce administrative costs of both taxpayers and the tax authorities.

This Alert summarizes the key changes to the application procedures.

Detailed discussion

Simplified procedures outlined in STA PN 24

An enterprise with related-party transactions in excess of RMB40 million (US$6.2 million) for each of the past three years before its APA application, meeting one of the prescribed requirements (e.g., the enterprise has entered into an APA in the past 10 tax years before filing the application, and has been in compliance with the APA), can apply for the simplified procedures.

Under the simplified procedures, the six steps of the APA application process1 (comprising the pre-filing meeting, intention discussion, analysis and evaluation, formal application, negotiation and conclusion of the arrangement, and execution monitoring) (the general procedures) will be reduced to three steps:

  1. Evaluation of the application
  2. Negotiation and conclusion
  3. Execution monitoring

The pre-filing meeting is removed and the steps for the intention discussion, analysis and evaluation, and formal application are combined into the first step.

Upon receiving an APA application from an enterprise, the supervising tax authority shall issue a notice for tax matters within 90 days to inform the enterprise whether the application has been accepted and a decision on the APA application should be reached within six months after the notification is issued.

However, it is further specified in the STA’s official interpretation that, if a decision cannot be reached within the prescribed timeframe, the enterprise will only be able to apply for a unilateral APA under the general procedures. To reduce the tax administrative burden of taxpayers, documents that have been submitted by applicants in the previous simplified procedures (not completed within the prescribed timeframe) would not need to be re-submitted for the general procedures.


At this stage, the simplified procedures will not be available for unilateral APAs involving tax authorities of two or more provinces, autonomous regions, municipalities directly under the central government and cities with separate planning.

In addition, if an enterprise meets any of the five conditions listed in STA PN 24 (e.g., the enterprise is currently under tax inspection or transfer pricing (TP) audit, or does not have TP documentation in place, etc.), the enterprise will not be eligible  for the simplified procedures.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Tax Services Limited, Hong Kong

Ernst & Young Ernst & Young (China) Advisory Limited

Ernst & Young LLP (United States), China Tax Desk

Ernst & Young LLP (United Kingdom), China Tax Desk, London

Ernst & Young LLP (United States), Asia Pacific Business Group, New York

Ernst & Young LLP (United States), Asia Pacific Business Group, Chicago



  1. As prescribed in STA PN [2016] No. 64 (on Issues Related to Improving the Administration of APAs).

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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