Executive summary

The IRS Advance Pricing and Mutual Agreement (APMA) Program issued the 26th annual Advance Pricing Agreement (APA) report (the Report) on March 27, 2025, in Announcement 2025-13. The Report discusses APMA, including its activities and structure for calendar year 2024, and gives useful insights into the operation of the APA Program.

The number of APA filings remained relatively consistent in 2024, with taxpayers filing 169 APA requests (167 in 2023). The total number of APAs executed, however, decreased slightly from 156 to 142. The median amount of time to execute an APA, however, decreased from 42.5 months in 2023 to 39.1 months in 2024.

Highlights

• After completing a record number of APAs in 2023 (156), the number of APAs executed in 2024 (142) was the second highest for a single year in the last decade.
• For the fourth year in a row, APMA received more APAs than it executed. During 2024, 169 APA applications were filed and 142 APAs were executed. Due to 17 APA applications being withdrawn, the inventory of pending APAs remained relatively stable in 2024.
• At year end, 560 APA requests were pending (485 bilateral, 24 multilateral and 51 unilateral), up slightly from 558 in 2023.
• The median time required to complete an APA decreased for the second year in a row from 42 months in 2023 to 33.5 months in 2024.
• Overall APMA headcount increased to 127 professionals (including the Director) as of December 31, 2024 (from 114 at the end of 2023).
• Details are provided on the treaty partners to bilateral APAs executed during the year. APAs with India (29%), Japan (23%) and Italy (11%) comprised approximately 63% of all US bilateral APAs executed in 2024.
• There has been a continued interest in bilateral APAs filed with Japan (32%), India (26%) and Canada (10%), representing 68% of all US bilateral APAs filed.
• Approximately 56% of the APAs executed in 2024 were for transactions between foreign parented companies and their US subsidiaries, while 37% were executed with transactions between US parent companies and their foreign subsidiaries.
• The Comparable Profits Method/Transactional Net Margin Method (CPM/TNMM) was applied in 91% of the APAs with intercompany services transactions. The most commonly selected profit level indicator (PLI) with the CPM/TNMM was the operating margin (OM) and operating profit to operating expense, used 67% of the time.
• The CPM/TNMM continues to be the most commonly applied method (78%) in cases involving transfers of tangible and intangible property. The OM was once again the PLI most commonly applied, being used in 72% of cases.

APA applications, executed APAs and pending APAs

Since the APA Program's inception in 1991 through December 31, 2024, the IRS has received a total of 3,455 APA applications and executed 2,566 APAs. The following table reports summary statistics about 2024 APA applications, executed APAs and pending APAs. Data are reported separately for unilateral and bilateral APAs, and completion times for 2024, 2023 and 2022 are compared.

IRS staffing changes and operating efficiencies

The total number of APMA employees increased during 2024. The number of economists increased in 2024 (35) compared to 2023 (29); the number of team leaders (a mix of lawyers and accountants) also increased in 2024 (76) from 2023 (70). There were 12 managers and three assistant directors in 2024. Each assistant director supervised four managers who lead teams comprised of both team leaders and economists. The IRS APMA contacts are listed here.

Months to complete APAs

The following data indicates that the average time to completion for new bilateral APAs decreased from 50.0 months in 2023 to 45.9 months in 2024. The average time to completion for renewal of bilateral APAs remained approximately the same as the previous year (36.1 months in 2023 and 36.0 months in 2024). The average time to completion for renewal of unilateral APAs decreased from 30.2 months in 2023 to 24.3 months in 2024. The average time to completion for new unilateral APAs was nearly cut in half in 2024 (28.9) compared to 2023 (45.2 months), although the latter may have been due to no new unilateral APAs being executed in 2022.

Treaty partners in bilateral APAs

As shown in the following chart, APAs with India represent more than any other one country at 29% of bilateral APAs executed in 2024. This demonstrates that the relationship between the IRS and India's tax authority continues the improvement seen during the last several years. In addition, the number of India APA requests filed continues to increase steadily. In 2024, India represented 26% of bilateral APAs filed, 22% of pending bilateral APAs and 29% of executed bilateral APAs (leading in pending bilateral APAs and executed bilateral APAs, and second in filed bilateral APAs). This constitutes a positive outcome given the uncertainty and severe risk of double taxation faced by multinationals investing in India.

In a reversal of positions from 2023, Japan is the second most frequently involved treaty partner in executed APAs in 2024, with 23% of executed bilateral APAs. This is most likely attributable to the maturity of the APA Programs in the US and Japan and the negotiating experience of the APMA team and the competent authority team representing the National Tax Administration of Japan.

Bilateral APAs filed per country¹

Bilateral APAs executed by country

Industries covered

As shown in the following chart, manufacturing and wholesale/retail trade continue to comprise the largest shares of APA cases, representing 57% of all APAs executed in 2024. This is a small decrease from the previous year, when 62% of all APAs executed were in manufacturing or wholesale/retail trade and is due to an increase in the number of services and management APAs executed.

Industry representation

Approximately 72% of manufacturing cases involved chemicals, transportation equipment, and computer and electronic products, while the wholesale/retail trade cases were mostly wholesalers of durable goods (54%).

Manufacturing

Wholesale/retail trade

Covered transactions and tested parties

The Report describes, in overall terms, the covered transactions and sets out the types of tested parties in each transaction. Note that one APA may cover more than one transaction and not every APA has a tested party.

Covered transactions

Types of tested parties

Critical assumptions

A critical assumption is a fact on which the taxpayer's transfer pricing methodology depends. APAs typically list critical assumptions that involve a particular mode of conducting business operations, a particular corporate or business structure, or a range of expected business volume.

A few bilateral cases have included critical assumptions tied to either the taxpayer's profitability in a certain year or over the term of the APA, or to the amount of non-covered transactions as a percentage of the taxpayer's revenue.

The IRS did not cancel any APAs in 2024 relating to the failure of a critical assumption (or any other reason).

Results

The APA Program's results contained in the Report for 2024 include the following:

• The number of APA filings was 169, up from 167 in 2023.
• APMA executed 142 APAs, down from 156 in 2023.
• The median time to complete a new bilateral APA decreased to 45.9 months from 50 months in 2023.
• The median time to complete a renewal of a unilateral APA decreased to 25.0 months from 25.2 months in 2023.
• The median time to complete an APA (bilateral and unilateral) decreased to 33.5 months, compared to 42.0 months in 2023 and 43.4 months in 2022.

Implications

After a record year for completing APAs in 2023 (156), APMA continued to complete a high number of APAs in 2024 (142), which is the second highest since 2013 (145). APMA did this while reporting a welcome decrease in the length of time it takes to complete a new bilateral APA (45.9) and decreasing the median time to close any APA request (33.5) — new or renewal, unilateral or bilateral — by almost nine months.

Given ongoing efforts to streamline federal agencies' operations, including potential reductions in staffing and budgets, APMA may face resource constraints. Some taxpayers and advisors have noted staffing changes within APMA teams handling pending APA requests. While this may impact the number of APAs executed in 2025 and extend timelines in certain cases, the APA Program remains a valuable tool for achieving transfer pricing certainty. Taxpayers considering an APA are encouraged to work closely with their advisors to navigate the current process effectively and to prepare for the specific complexities of their APA submissions.