The IRS on March 27 released Announcement 2025-13, the annual report on the advance pricing agreement (APA) program for calendar year 2024, which shows that the number of APAs executed during 2024 declined slightly compared to 2023, but that decline was accompanied by a significant decrease in the time to complete an agreement. Even with the slight decline in the number of executed APAs from the record-breaking 2023 year, when 156 agreements were finalized, 2024 had the second highest number of completed APAs since 2013.
According to the report, 142 APAs were executed in 2024 (13 unilateral, 119 bilateral, and 10 multilateral) compared with the 156 that were completed in 2023 (24 unilateral, 130 bilateral, and 2 multilateral). The term “executed APAs” in the report includes both initial and renewal APAs; since 83 of the 2024 executed APAs were renewals, that means that only 59 of the APAs completed in 2024 were new agreements, a significant decline from 2023 when 82 new APAs were finalized.
The number of new APA applications filed remained remarkably stable in 2024, with a total of 169 applications (21 unilateral, 142 bilateral, and 6 multilateral), compared to 167 filed in 2023 (17 unilateral, 144 bilateral, and 6 multilateral).
Similarly, the number of pending APAs as of December 31, 2024, was almost identical to the 2023 total, with 560 applications pending (51 unilateral, 485 bilateral, and 24 multilateral), compared to 558 pending at the end of 2023 (44 unilateral, 480 bilateral, and 34 multilateral).
These metrics are summarized in the table below:
| Unilateral | Bilateral | Multilateral | Total | |
| APA Applications Filed | 21 | 142 | 6 | 169 |
| Total Executed in 2024 | 13 | 119 | 10 | 142 |
| Total Pending as of 12/31/24 | 51 | 485 | 24 | 560 |
Completion Time
The average completion time for an APA, including both unilateral and bilateral APAs, continued to decline, from 42 months in 2023 to 39.1 in 2024. Similarly, the average completion time for a new APA went down to 45.3 months in 2024, compared to 49.4 in 2023, and the median time for a renewal APA went down slightly, to 34.5 in 2024 from 34.9 in 2023.
APA Term Length
Rev. Proc. 2015-41, which sets out the procedures for applying for an APA, provides that taxpayers should request an APA term that will cover at least five prospective years. Taxpayers may also request that the APA be “rolled back” to cover one or more earlier taxable years, although the appropriate APA term is decided on a case-by-case basis.
Not surprisingly, then, a five-year term was the most common term length of those APAs executed in 2023: 56 agreements included five-year terms, 33 had a six-year term, and 24 had a seven-year term. The average term length was six years, the same as in 2023.
A substantial number of those APAs with terms of greater than five years were submitted with requests for five-year terms, and the additional years were agreed to by the taxpayer and the IRS (or, in the case of a bilateral APA, by the IRS and the foreign government) at the taxpayer’s request to ensure a reasonable amount of prospectivity in the APA term.
Of the APAs executed in 2024, 28% included rollback years, compared to 19% in 2023, meaning that the terms of the APA were rolled back to cover past years that were still open for audit. In many cases, these years had been under audit before the taxpayer requested the APA.
Executed APAs
For the first time, India surpassed Japan as the most frequent bilateral APA counterpart, with 29% percent of all APAs executed in 2024, compared to 23% involving Japan. Italy was third, with 11% of all bilateral APAs. Similarly, half of the pending bilateral APA requests involved either Japan (28%) or India (22%).
In terms of the relationship between controlled parties, a majority of APAs executed in 2024 – 56% – involved a non-U.S. parent and a U.S. subsidiary, and 37% involved a U.S. parent and a non-U.S. subsidiary. These numbers are identical to those for 2023.
No single type of covered transaction dominated in the APAs executed in 2024: 33% involved tangible property, 43% involved services, and 22% involved intangible property.
A substantial majority of covered transactions involving the sale of tangible property, the use of intangible property, or the performance of services were evaluated using the comparable profits method/transactional net margin method -- 78% for tangible and intangible property transactions and 91% for services transactions.
BDO Insight
The 2024 report lists a staff of 126 in the Advance Pricing and Mutual Agreement Program as of December 31, 2024: 76 team leaders, 35 economists, 12 managers, and 3 assistant directors. This represents an increase from the 2023 total of 114, with six additional team leaders and six more economists. This growth may be responsible for the accelerated pace of completion. The APMA program has already seen its staff reduced since January of this year, however, and further cuts are expected in the near future.
Although the number of executed APAs remained steady in 2024, and the completion time for an APA declined significantly, the time to complete an APA remains lengthy, with an average of 45.3 months for a new APA. The number of APAs filed, which in 2023 decreased for the first time since 2019, rebounded, with 169 APAs filed (compared to 167 in 2023), but there continues to be a significant backlog of total pending APAs, with 560 requests.
APAs have historically been the primary path to obtain advance certainty regarding intercompany transactions for many multinational companies. APAs have also reduced the likelihood of rigorous tax audits and the cost of compliance over the term of the APA. It remains to be seen whether the reductions in APMA staff will impact the IRS’s ability to execute APAs in the coming years.
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