The IRS Advance Pricing and Mutual Agreement (APMA) Program issued the 27th annual Advance Pricing Agreement (APA) report (the Report) on March 30, 2025, in Announcement 2026-08. The Report discusses APMA, including its activities and structure for calendar year 2025, and gives useful insights into the operation of the APA Program.

The number of APA filings increased slightly in 2025, with taxpayers filing 178 APA requests (169 in 2024). The total number of APAs concluded, however, decreased for a second year from 142 to 110 and the average time to finalize an APA increased from 39.1 months in 2024 to 44.1 months in 2025.

Highlights

• After two years of historically high numbers of finalized APAs (156 in 2023 and 142 in 2024), the number of APAs executed in 2025 (110) was closer to the number of APAs closed between 2017 and 2021.
• For the fifth year in a row, APMA received more APAs than it closed. During 2025, 178 APA applications were filed and 110 APAs were executed. The total open cases increased by 62 cases, an increase of approximately 11%.
• At year end, 622 APA requests were pending (543 bilateral, 18 multilateral and 61 unilateral).
• The median time to complete an APA increased by about eight months, from 33.5 months in 2024 to 41.6 months in 2025.
• Overall APMA headcount decreased by about 15%, from 126 professionals (including the Director) as of December 31, 2024, to 108 as of December 31, 2025. The headcount is now slightly below the headcount as of December 31, 2023 (114).
• APAs with India (35%), Japan (25%) and Canada (11%) comprised approximately 71% of all US bilateral APAs executed in 2025.
• Bilateral APAs filed with Japan (27%), India (21%) and Canada (11%) represent 59% of all US bilateral APAs filed.
• The APAs executed in 2025 were evenly split between into two groups: transactions between foreign-parented companies and their US subsidiaries (45%), and transactions between US-parented companies and their foreign subsidiaries (45%). Over the last several years, a growing percentage of US-parented companies has sought APAs. The remaining 10% of executed APAs were between sister companies.
• The Comparable Profits Method/Transactional Net Margin Method (CPM/TNMM) was applied in 83% of the APAs with intercompany services transactions. The most commonly selected profit level indicators (PLIs) with the CPM/TNMM were the operating margin (OM) and operating profit to operating expense, used 66% of the time.
• The CPM/TNMM continues to be the most commonly applied method (86%) in cases involving the transfer of tangible property and the use of intangible property. The OM was once again the PLI most commonly applied, being used in 57% of cases.

APA applications, executed APAs and pending APAs

Since the APA Program's inception in 1991 through December 31, 2025, the IRS has received a total of 3,633 APA applications and executed 2,676 APAs. The following table reports summary statistics about 2025 APA applications, executed APAs and pending APAs. Data are reported separately for unilateral and bilateral APAs, and completion times for 2025, 2024 and 2023 are compared.

IRS staffing changes and operating efficiencies

The total number of APMA employees decreased during 2025. The number of economists decreased from 35 (2024) to 30 (2025); the number of team leaders (a mix of lawyers and accountants) also decreased from 76 (2024) to 63 (2023). There were still 12 managers and three assistant directors in 2025.

Months to complete APAs

The following data indicate that the average time to complete new bilateral APAs returned to 2023 levels, taking 50 months in 2025 compared to 45.9 months in 2024. The average time to complete renewal of bilateral APAs increased slightly (37.5 months in 2025 and 36 months in 2024). The average time to complete renewal of unilateral APAs substantially increased from 24.3 months in 2024 to 40.4 months in 2025; the average time to complete new unilateral APAs also increased (28.9 months in 2024 to 39.6 months in 2025).

Treaty partners in bilateral APAs

As shown in the following chart, APAs with India represent 35% of bilateral APAs executed in 2025, more than any single country. This demonstrates that the relationship between the IRS and India's tax authority continues the improvement seen during the last several years, which is a positive outcome given the uncertainty and risk of double taxation faced by multinationals investing in India.

Japan is once again the second most frequently involved treaty partner in executed APAs in 2025 with 25% of executed bilateral APAs. This is most likely attributable to the maturity of the APA Programs in the US and Japan and the negotiating experience of the APMA team and the competent authority team representing the National Tax Administration of Japan.

Bilateral APAs filed per country¹

Bilateral APAs executed by country

Industries covered

There has been a slight change in the percentages among the industries for which APAs were executed in 2025. Wholesale/retail trade continues to comprise the largest share, with 29% of the executed APAs. However, the services industry overtook manufacturing to claim the second largest share, with 25% of executed APAs. While the two industries comprise a majority of the executed APAs, the percentage of APAs for both industries is lower than in previous years. This may demonstrate a change in the types of companies that are looking for the tax certainty provided by APAs.

Industry representation

Covered transactions and tested parties

The Report describes, in overall terms, the covered transactions and sets out the types of tested parties in each transaction. Note that one APA may cover more than one transaction and not every APA has a tested party.

Covered transactions

Types of tested parties

Results

The APA Program's results in the Report for 2025 include the following:

• The number of APA filings was 178, up from 169 in 2024.
• APMA executed 110 APAs, down from 142 in 2024.
• The median time to complete a new bilateral APA increased from 45.9 months in 2024 to 50 months in 2025.
• The median time to complete a renewal of a unilateral APA increased from 25 months in 2024 to 40.4 months in 2025.
• The median time to complete an APA (bilateral and unilateral) increased to 44.1 months, compared to 33.5 months in 2024 and 42 months in 2023.

Implications

There are several factors that are likely contributing to the change in the APA program's results in the US. First, 2023 and 2024 were banner years for the program with the highest completions since its inception and historically high staffing headcounts.

Second, the efforts to shrink the federal workforce were effective in reducing the size of APMA. With fewer individuals working on cases and taxpayer appetite for APAs remaining strong, it is understandable that the number of cases closed would decrease and the overall inventory would increase. This trend was anticipated at the beginning of 2025 (see Tax Alert 2025-0773).

Finally, the US implementation of tariffs and overall economic conditions have impacted US treaty partners' calculus when negotiating bilateral APAs. With the uncertainty around global economic conditions in 2025, tax administrations around the world have undertaken efforts to protect their jurisdictions' tax collections. This change may cause competent authorities to take stronger positions, requiring longer negotiations for the two sides to agree on the terms of a bilateral APA.

However, these challenges should not discourage taxpayers from seeking tax certainty by applying for an APA. Consulting with tax advisors to gain a realistic expectation of the current APA process continues to be highly important; exposure to numerous APA requests provides advisors with insight into what types of cases are best suited for the current APA program and the possible timeline for an APA request.