Desktop VersionSite MapContact UsShare RSS
  • Default font size
  • Bigger font size
  • Biggest font size

Advance Pricing Arrangement

An advance pricing arrangement (APA) is an arrangement that determines, in advance of controlled transactions, an appropriate set of criteria for the determination of the transfer pricing for those transactions over a fixed period of time. It provides a tool for multinational enterprises managing and mitigating the transfer pricing risk on a prospective basis.    

Basic Features of APA


  • establishes the transfer pricing methodology;
  • covers a period of 3 to 5 years; and
  • requires annual reporting.

Benefits of APA


  • provides greater certainty on the tax liability;
  • ensures a fair application of the arm’s length principle;
  • reduces the risk of double taxation; and
  • avoids the risk of audit and penalty.

Who can Apply

You may seek an APA if you have controlled transactions with income or loss to be computed under section 50AAF or 50AAK of the Inland Revenue Ordinance and need assurance that those transactions comply with the arm’s length principle.

How to Apply

You should first submit a request for APA early engagement.  The request together with a draft case plan should be submitted at least 6 months prior to the proposed commencement date for the APA requested to:

Chief Assessor (Tax Treaty)
Tax Treaty Section
Inland Revenue Department
GPO Box 10851, Hong Kong

More Information

For more information, please refer to the Departmental Interpretation and Practice Notes No. 48 (Revised) – Advance Pricing Arrangement or contact us at (852) 2594 5403 or