United States - IRS Releases Annual APA Statutory Report for 2025

Summary

The Internal Revenue Service (IRS) released its Annual APA Statutory Report on March 30, 2026, providing statistical results for the U.S. advance pricing agreement (APA) program for 2025. Notably, the number of executed APAs decreased by approximately 20% year-over-year, representing a notable feature of the 2025 results.

Key points

APA Applications Received

The IRS reported that 178 APA applications were filed in 2025, compared to 169 applications in 2024, representing an increase of approximately 5.3%. Of the 2025 total, 153 applications were bilateral APA requests.

Executed APAs

A total of 110 APAs were executed in 2025, compared to 142 APAs executed in 2024, representing a decrease of approximately 22.5%.

Pending APAs

The total APA inventory increased from 560 cases as of December 31, 2024, to 622 cases as of December 31, 2025, representing an increase of approximately 11.1%.

APAs Executed by Industry

Top three industries for executed APAs in 2025 were Wholesale/Retail Trade (32 cases), Services (28 cases), and Manufacturing (22 cases).

For reference, the top three industries in 2024 were Manufacturing (42 cases), Wholesale/Retail Trade (39 cases), and Services (29 cases).

Nature of Relationship between Controlled Parties

In 2025, APAs involving U.S. parent companies and non-U.S. subsidiaries accounted for 45% of executed agreements, while APAs involving non-U.S. parent companies and non-U.S. subsidiaries also represented 45%.

In 2024, APAs involving U.S. parent companies and non-U.S. subsidiaries accounted for 37%, whereas those involving non-U.S. parent companies and non-U.S. subsidiaries represented 56%.

Types of Covered Transactions

Provision of services by a non-U.S. entity was the largest category of covered transactions, accounting for 30% of transactions in executed APAs in 2025.

Time to Complete APAs

The average time to complete an APA was 44.1 months in 2025, compared to 39.1 months in 2024, representing an increase of approximately 12.8%.

The median completion time increased from 33.5 months in 2024 to 41.6 months in 2025, representing an increase of approximately 24.2%.

Bilateral APAs Executed by Country

The top three countries for bilateral APAs executed in 2025 were India (35%), Japan (25%), and Canada (11%). In 2024, the top three countries were India (29%), Japan (23%), and Italy (11%).

Observations

The reported statistics are considered to reflect several factors affecting the APA program, including APMA resource constraints, periods of U.S. government shutdown, and the impact of tariffs on both tested parties and comparable companies.

As a result, the treatment of tariff impacts in economic analyses and forward-looking projections may become a more prominent issue in APA negotiations, potentially increasing the complexity of the APA process for both taxpayers and tax authorities.

Source

Internal Revenue Service, Announcement 2026-08 (March 30, 2026)

https://www.irs.gov/pub/irs-drop/a-26-08.pdf

Internal Revenue Service, Announcement 2025-13 (March 27, 2025)

https://www.irs.gov/pub/irs-drop/a-25-13.pdf

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Disclaimer:

This content is for general informational purposes only and does not constitute professional advice.

Information provided herein is based on publicly available sources as of the publication date and may be subject to change.

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