The Australian Taxation Office (ATO)has defended its approach to transfer pricing adjustments and obtaining information from taxpayers through increased inquiries and audits. The ATO has also risen to nearly 33 months, up from around 12 months in 2010 to 2015. One of the reasons for the delay and lower APA numbers may be the greater scrutiny that the ATO has been placing on APA applications following the revelations of base erosion and profit shifting.
Also, as mentioned above, the ATO has published transfer pricing positions with a low risk of noncompliance. These may allow some taxpayers—for example, those acting as a distributor—to achieve a similar level of tax certainty over their transfer pricing risk as from the APA program but with lower costs of compliance.
The ATO started a review of the Advance Pricing Arrangements in 2022 that focused on the efficiency of the program in assuring transfer pricing compliance risk and suitability for taxpayers.
When companies act as distributors, they may choose to follow the ATO's transfer pricing positions with a low risk of noncompliance. This allows companies to achieve a similar level of certainty over their transfer pricing risk as under the APA program but with lower costs of compliance.