A review of advanced pricing agreement recommendations

This paper is centred on the advanced pricing agreements (APAs). The increasing globalisation has created many challenges for multinational enterprises (MNEs) and among these are taxation and accounting related issues. Transfer pricing issues have become a major international taxation issue in recent years as MNEs can easily manipulate their transfer prices to avoid taxes. Tax avoidance by multinational companies has become a serious problem for many governments. The aim of this paper is to examine the use of advance pricing agreements (APAs) in transfer pricing and to explore the recommendations suggested by scholars in using past performance to benchmark transfer prices.