Issued by:    General Office of the State Administration of Taxation 
Issue Date:     November 25, 2025
Links:    https://www.chinatax.gov.cn/chinatax/n810214/c102374/c102375d/c5245175/content.html

The State Taxation Administration (“STA”) has compiled and analyzed the negotiation and signing of Advance Pricing Arrangements (“APA”) in China from 2005 to 2024, and publicly released the China Advance Pricing Arrangement Annual Report (2024) in both Chinese and English. The main contents are as follows:

1. Definition of APA: An arrangement whereby an enterprise applies in advance to negotiate and reach agreement with the tax authorities in respect of the transfer pricing methods and corresponding calculation methods to be applied to its related party transactions for future years in accordance with the arm's length principle. 

2. Review of APA: Clearly state that a submission that presents innovative application of transfer pricing methods or high quality quantitative analysis for intangibles, cost savings or market premiums will merit the STA's prioritized attention.

3. Development trend of APA: As of the end of 2024, 165 Unilateral APAs (“UAPA”) have been signed, and 170 Bilateral APAs (“BAPA”) have been signed, which shows that the cumulative number of signed BAPAs has surpassed that of UAPAs for the first time. Meanwhile, there are more BAPAs than UAPAs in intent phase and application phase, which suggests that more and more enterprises prefer to apply for BAPA to gain taxation certainty.

4. Related-party transaction types involved in signed APAs: Over half of the transactions involve the transfer of the right to use or ownership of tangible assets (approximately 56%), while a smaller portion pertains to the transfer of the right to use or ownership of intangibles (about 20%) and service transactions (around 23%). Only about 1% of the transactions are categorized as financing activities.

5. Regional distribution of BAPAs: The distribution is concentrated primarily in Asia, accounting for 69%, followed by Europe at 19%, North America at 11%, and Oceania at 1%.

6. Time taken of APAs: Over 90% of UAPAs are completed within 24 months, while the proportion of BAPAs finalized within 24 months stands at 51%.

7. Transfer pricing method applied for signed APAs: The primary methods applied are the Transactional Net Margin Method (“TNMM”)-Full Cost Mark Up, and the TNMM-EBIT Operating Margin. Additionally, the Cost Plus Method is also relatively common-used. In contrast, other transfer pricing methods are less frequently applied in APAs.