Core Viewpoint - The increasing number of bilateral Advance Pricing Agreements (APAs) in China reflects a structural breakthrough in international tax cooperation, providing greater tax certainty for multinational enterprises operating in China [1][2]. Group 1: APA Trends and Data - From 2005 to 2024, China has signed a total of 335 APAs, with 170 being bilateral, marking a significant shift as bilateral APAs have now surpassed unilateral ones [1]. - In 2024, China signed 39 APAs, continuing the upward trend from 2023, with 12 unilateral and 27 bilateral agreements [1]. - The number of bilateral APAs in the intention phase for 2024 has reached 70, an increase of 10 from the previous year, indicating a growing preference among multinational companies for bilateral agreements to mitigate double taxation risks [1][2]. Group 2: Regional Focus and Implications - Approximately 70% of bilateral APAs signed from 2005 to 2024 were with Asian countries, highlighting China's role as a hub for regional tax coordination [3]. - The 27 new bilateral APAs in 2024 include 19 focused on Asia, along with agreements with Europe (6) and North America (2) [3]. Group 3: Support for Enterprises - The Chinese tax authorities are prioritizing the processing of bilateral APA applications for "going out" enterprises, which is expected to enhance the tax certainty for these companies in their international operations [2][3]. - Companies are encouraged to choose between unilateral and bilateral APAs based on their business characteristics, agreement networks, and cost-effectiveness [3]. Group 4: Recommendations for Enterprises - For enterprises primarily facing tax risks within China, unilateral APAs are recommended as a simpler tool, while bilateral APAs are suggested for those with complex cross-border transactions to avoid international double taxation risks [4]. - The value of APAs as a tool for providing tax certainty is expected to be increasingly recognized by enterprises amid rising global economic uncertainties [4].

Group 1: APA Signing Trends - In 2024, China signed a total of 39 APAs, comprising 12 unilateral and 27 bilateral agreements, showing an increase from 36 APAs in 2023[8] - The number of bilateral APAs signed in 2024 included 22 new agreements and 5 renewals, with 70 bilateral APAs in the intention stage, up by 10 from 2023[8] - The completion rate for APAs in China was 24.20% in 2024, significantly higher than the global average of 18.1%, ranking seventh among reported jurisdictions[8] Group 2: International Cooperation and Industry Focus - From 2005 to 2024, 170 bilateral APAs were signed, with 118 (approximately 70%) involving Asian countries, 33 (20%) with European countries, and 18 with North America[8] - The manufacturing sector remains the primary focus for APA services, with 22 cases involving tangible assets, 12 involving intangible assets, and 8 involving services[8] - The transaction net profit method was the most commonly used transfer pricing method, applied 328 times (83.9% of cases), while other methods were also utilized[8] Group 3: Future Outlook and Compliance - The inventory of bilateral APAs reached 177 cases in 2024, an increase of 28 from 2023, indicating a trend towards stricter acceptance and review processes[11] - Companies are encouraged to submit comprehensive and accurate documentation to expedite the APA application process, particularly focusing on value chain and market premium analyses[11] - Chinese tax authorities are actively enhancing international tax cooperation, with 23 transfer pricing MAP cases concluded in 2024, reflecting a commitment to dispute prevention and resolution[11]