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Advance Price Agreement

Advance Price Agreement Template for Philippines

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Key Requirements PROMPT example:

Advance Price Agreement

"I need a unilateral Advance Price Agreement template for our pharmaceutical manufacturing company's domestic related-party transactions in the Philippines, with particular focus on our R&D cost sharing arrangements between parent company and local subsidiaries."

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Document background
An Advance Price Agreement (APA) is a crucial document used in the Philippine business environment to establish certainty in transfer pricing arrangements between related entities. This agreement is particularly important for companies engaging in significant intercompany transactions, whether domestic or international. The document, governed by Philippine tax laws and regulations, specifically Revenue Regulations No. 19-2020, provides taxpayers with clarity on acceptable transfer pricing methodologies and helps prevent future disputes with tax authorities. APAs can be unilateral (involving only the Philippine tax authority), bilateral, or multilateral (involving foreign tax authorities), and typically cover a period of 3-5 years. The agreement includes detailed pricing methodologies, critical assumptions, compliance requirements, and annual reporting obligations, serving as a preventive measure against transfer pricing adjustments and potential double taxation issues.
Suggested Sections

1. Parties: Identification of the taxpayer and the tax authority/authorities involved in the APA

2. Background: Context of the application, brief description of the business operations and related party transactions

3. Definitions: Detailed definitions of technical terms, pricing concepts, and other key terminology used in the agreement

4. Scope of Agreement: Specific transactions, products, or services covered by the APA

5. Term of Agreement: Duration of the APA, including start and end dates

6. Transfer Pricing Methodology: Detailed description of the agreed pricing method, including calculations and rationale

7. Critical Assumptions: Key business and economic conditions that must remain constant for the APA to remain valid

8. Annual Compliance Requirements: Reporting obligations and documentation requirements

9. Revision and Renewal Provisions: Procedures for modifying or extending the agreement

10. Termination Conditions: Circumstances under which the APA may be terminated by either party

11. Confidentiality: Provisions regarding the treatment of sensitive information

12. Governing Law: Specification of Philippine law as the governing jurisdiction

Optional Sections

1. Competent Authority Provisions: Required for bilateral or multilateral APAs involving foreign tax authorities

2. Industry-Specific Considerations: Special provisions relevant to particular industries or business models

3. Dispute Resolution Mechanism: Specific procedures for resolving disagreements, particularly relevant for complex APAs

4. Roll-back Provisions: Terms for applying the APA methodology to previous tax years

5. Foreign Exchange Considerations: Required when transactions involve multiple currencies

6. Force Majeure: Provisions for handling extraordinary events that might affect the pricing methodology

Suggested Schedules

1. Schedule A - Covered Transactions: Detailed list and description of all transactions covered by the APA

2. Schedule B - Transfer Pricing Methodology Details: Technical details of pricing calculations, including formulas and examples

3. Schedule C - Critical Assumptions Analysis: Detailed analysis and parameters of critical assumptions

4. Schedule D - Compliance Requirements: Specific documentation and reporting templates

5. Appendix 1 - Financial Projections: Relevant financial forecasts and budgets supporting the pricing methodology

6. Appendix 2 - Functional Analysis: Detailed analysis of functions, risks, and assets of involved parties

7. Appendix 3 - Comparability Analysis: Documentation of comparable transactions or companies used in the analysis

8. Appendix 4 - Economic Analysis: Supporting economic studies and market analyses

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Advance Pricing Agreement
Arm's Length Principle
Associated Enterprises
Bureau of Internal Revenue
Comparable Uncontrolled Price Method
Comparable Uncontrolled Transaction
Competent Authority
Controlled Transaction
Cost Plus Method
Critical Assumptions
Documentation Requirements
Functional Analysis
Independent Enterprise
Intangible Property
Interquartile Range
Related Party
Related Party Transaction
Resale Price Method
Roll-back Period
Tested Party
Testing Period
Transfer Pricing
Transfer Pricing Method
Transactional Net Margin Method
Uncontrolled Transaction
Covered Transaction
Profit Level Indicator
Comparable Company
Operating Margin
Berry Ratio
Compliance Period
Annual Compliance Report
Bilateral APA
Unilateral APA
Multilateral APA
Compensating Adjustment
Financial Indicators
Material Change
Term of Agreement
Renewal Period
Clauses
Parties
Recitals
Definitions
Scope
Term and Duration
Transfer Pricing Methodology
Critical Assumptions
Documentation Requirements
Compliance Obligations
Record Keeping
Confidentiality
Data Protection
Revision and Amendment
Force Majeure
Dispute Resolution
Governing Law
Termination
Renewal
Representations and Warranties
Reporting Requirements
Review and Monitoring
Competent Authority Provisions
Anti-Abuse
Severability
Notices
Entire Agreement
Assignment
Legal Costs
Execution
Foreign Exchange
Roll-back Provisions
Relevant Industries

Manufacturing

Technology and Software

Pharmaceutical

Automotive

Consumer Goods

Financial Services

Telecommunications

Energy and Resources

E-commerce

Professional Services

Chemical Industry

Electronics Manufacturing

Relevant Teams

Tax

Finance

Legal

Treasury

Compliance

Risk Management

International Business

Corporate Planning

Financial Reporting

Transfer Pricing

Relevant Roles

Chief Financial Officer

Tax Director

Transfer Pricing Manager

International Tax Manager

Finance Director

Tax Compliance Manager

Corporate Controller

Legal Counsel

Financial Planning Manager

Treasury Manager

Risk Management Officer

Compliance Officer

Senior Tax Analyst

International Business Director

Industries
National Internal Revenue Code (NIRC) of 1997: The primary tax legislation in the Philippines that provides the basic framework for taxation, including transfer pricing provisions under Section 50
Revenue Regulations No. 2-2013: Provides the transfer pricing guidelines and rules for related party transactions in the Philippines, following OECD Guidelines
BIR Revenue Audit Memorandum Order No. 1-2019: Contains specific guidelines for conducting transfer pricing audits and documentation requirements
Revenue Regulations No. 19-2020: Implements the APA program in the Philippines, providing rules and procedures for applying for and negotiating APAs
Securities Regulation Code (Republic Act No. 8799): Relevant for public companies engaging in related party transactions that may be covered by the APA
Republic Act No. 10963 (TRAIN Law): Tax Reform for Acceleration and Inclusion Law, which amended certain provisions of the NIRC affecting transfer pricing
BIR Revenue Memorandum Order No. 27-2020: Provides guidelines on the submission of BIR Form No. 1709 (Related Party Transaction Form) and transfer pricing documentation
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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