US IRS issues annual APA report for 2022 showing significant increase in number of APAs filed

Local contact

EY Global

31 Mar 2023
Subject Tax Alert
Jurisdictions United States

Executive summary

The IRS Advance Pricing and Mutual Agreement (APMA) Program issued the 24th annual Advance Pricing Agreement (APA) report (the Report) on March 29, 2023, in Announcement 2023-10 (pdf). The Report discusses APMA, including its activities and structure for calendar year 2022, and gives useful insights into the operation of the APA Program.

The number of APA filings increased significantly in 2022, with taxpayers filing 183 APA requests (up from 145 in 2021). The total number of APAs concluded, however, decreased from 124 to 77 and the median amount of time to finalize an APA increased from 35.1 months in 2021 to 43.4 months in 2022.


  • The number of APAs completed during 2022 (77) is down significantly from last year (124) and is the lowest number of APAs executed since 2011.
  • For the second year in a row, APMA received more APAs than it closed. During 2022, 183 APA applications were filed and 77 APAs were executed, thus increasing the inventory of pending APAs.
  • At year end, 564 APA requests were pending (480 bilateral, 30 multilateral and 54 unilateral), up from 461 in 2021.
  • The median time required to complete an APA increased from 35.1 months in 2021 to 43.4 months in 2022.
  • Overall APMA headcount decreased to 98 professionals (including the Director) as of December 31, 2022 (from 118 at the end of 2021).
  • Details are provided on the treaty partners to bilateral APAs concluded during the year. APAs with Japan (39%), Canada (14%) and India (8%) comprised approximately 61% of all US bilateral APAs executed in 2022.
  • There has been a continued interest in bilateral APAs filed with Japan (24%), India (22%) and Canada (11%), representing 57% of all US bilateral APAs filed.
  • Approximately 62% of the APAs executed in 2022 were completed for transactions between foreign parented companies and their US subsidiaries, while 31% were completed with transactions between US parent companies and their foreign subsidiaries.
  • The Comparable Profits Method/Transactional Net Margin Method (CPM/TNMM) was applied in 80% 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 53% of the time.
  • The CPM/TNMM continues to be the most commonly applied method (77%) in cases involving transfers of tangible and intangible property. The OM was once again the PLI most commonly applied, being used in 73% of cases.
APA applications, executed APAs and pending APAs

Since the APA Program's inception in 1991 through December 31, 2022, the IRS has received a total of 3,119 APA applications and executed 2,268 APAs. The following table reports summary statistics about 2022 APA applications, executed APAs and pending APAs. Data are reported separately for unilateral and bilateral APAs, and completion times for 2022, 2021 and 2020 are compared.


  Unilateral Bilateral Total*
Year 2022 2021 2020 2022 2021 2020 2022 2021 2020
APA applications 22 16 15 154 121 103 183 145 121
APAs executed 10 25 19 66 98 105 77 124 127
Renewals executed 10 19 11 32 59 64 42 78 75
Pending requests for APAs 54 39 43 480 395 384 564 461 448
Pending requests for renewals 37 26 25 185 147 154 237 185 187
APAs canceled or revoked 0 0 0 0 0 0 0 0 0
APAs withdrawn 1 1 2 5 4 5 6 6 7

* In some cases, the totals include additional multilateral cases

IRS staffing changes and operating efficiencies

The total number of APMA employees decreased during 2022. The number of economists increased in 2022 (26) compared to 2021 (25), but the number of team leaders (a mix of lawyers and accountants) decreased significantly in 2022 (59) from 2021 (80). There were nine managers and three assistant directors in 2022. Each assistant director supervised three 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 indicate that the average time to completion for new bilateral APAs increased from 52.3 months in 2021 to 53 months in 2022. The average time to completion for renewal of unilateral APAs decreased from 24.3 months in 2021 to 22.9 months in 2022; no new unilateral APAs were executed in 2022.

  Bilateral (New) Bilateral (Renewal) Bilateral (Combined)
  2022 2021 2020 2022 2021 2020 2022 2021 2020
Average months 53.0 52.3 50.8 36.6 37.1 34.1 44.7 43.0 40.1
  Unilateral (New) Unilateral (Renewal) Unilateral (Combined)
  2022 2021 2020 2022 2021 2020 2022 2021 2020
Average months N/A 24.5 36.2 22.9 24.3 25.4 22.9 24.4 29.0
Treaty partners in bilateral APAs

As shown in the following chart, APAs with Japan represent more than any other one country at 39% of bilateral APAs executed in 2022. This is 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.

Canada is the second most frequently involved treaty partner in executed APAs in 2022 at 14%, as a result of its role as the third largest trading partner with the US (following China and Mexico) and the fact that it has been a US tax treaty partner for almost 80 years.

In addition, the number of India APA requests filed continues to increase steadily, in part as a result of the improved relationship between the IRS and India's tax authorities during the last several years. In 2022, India represented 14% of bilateral APAs filed, 22% of pending bilateral APAs and 8% of executed bilateral APAs (second only to Japan for filed bilateral APAs and pending bilateral APAs). This constitutes a positive outcome given the uncertainty and severe risk of double taxation faced by multinationals investing in India.

Bilateral APAs filed per country1

Bilateral apa filled by country
Bilateral apa executed by country
Industries covered

As shown in the following chart, manufacturing and wholesale/retail trade continue to comprise the largest share of APA cases, representing 82% of all APAs completed in 2022.

Industry representation
APA executed in 2022 by country

Approximately 90% of manufacturing cases involved computer and electronic products, chemicals and transportation equipment, while the wholesale/retail trade cases were dominated by wholesalers of durable goods (75%).

Types of manufacturing APAs
Types of wholesale/retail APAs
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.

Covered transactions
Types of covered transaction
Types of tested parties
Critical assumptions

A critical assumption is a fact on which the taxpayer's TPM 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.

The model APA used by the IRS includes a standard critical assumption that there will be no material changes to the taxpayer's business or to its tax or financial accounting practices during the APA term, and all the APAs executed in 2022 included that standard critical assumption.

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.

If a critical assumption has not been met, and the parties cannot agree on how to revise the APA, the APA can be canceled. The IRS did not cancel any APAs in 2022 relating to the failure of a critical assumption (or any other reason).


The APA Program's results contained in the Report for 2022 includes the following:

  • The number of APA filings was 183, up from 145 in 2021.
  • APMA executed 77 APAs, down from 124 in 2021.
  • The median time to complete a new bilateral APA rose to 53 months from 52.3 months in 2021.
  • The median time to complete a renewal of a unilateral APA dropped from 24.5 months in 2021 to 22.9 months in 2022.
  • The median time to complete an APA (bilateral and unilateral) rose to 43.4 months, compared to 35.1 months in 2021 and 32.7 months in 2020.

After several years of increasing personnel reported, APMA's headcount decreased in 2022. Currently, in addition to its Director, APMA has 59 team leaders, 26 economists, 9 managers and 3 assistant directors — a total of 98 transfer pricing professionals.

The number of APAs completed in 2022 is down significantly from last year and is the lowest number of APAs executed since 2011. It is unclear what caused this result, although some of the decrease may be attributable to the decrease in the number of team leaders and lingering delays from the COVID-19 pandemic. The number of APAs executed has varied a bit from year to year and, in the past, years with low numbers of APAs executed were often followed by years with robust APA completions. It will be interesting to see whether the number of APAs executed during 2023 will rebound to a number more consistent with the past decade.

As a result of the constant changes in the global economy and tax landscape, multinationals are continuing to revisit and assess supply chains impacts and manage global controversy matters related to their intercompany transactions. The substantial increase in the number of APA requests filed shows that APAs remain an attractive way to obtain transfer pricing certainty for many taxpayers. That said, anticipated changes to Revenue Procedure 2015-41 and access to the APA program, along with the decreased number of executed APAs in 2022, may increase the attractiveness of alternative dispute resolution procedures such as the International Compliance Assurance Program (ICAP).

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

National Tax Department, International Tax and Transaction Services, Transfer Pricing
  • Ryan J. Kelly, Americas ITTS Tax Controversy Leader
  • Hiro Furuya 
  • Ameet Kapoor 
  • Carlos M. Mallo 
  • Marla McClure 
  • Donna McComber 
  • Mike McDonald 
  • Tom Ralph 
  • Craig Sharon 
  • Kent Stackhouse 
  • Thomas A. Vidano 
  • Heather Gorman 
  • Giulia Di Stefano 
  • Carolina Figueroa
  • Mitch Gibson 

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.