How to gain Certainty during Uncertain Times?

At the recent International Tax Disputes Day conference hosted by the Tax Academy of Singapore on 22 May 2025, thought leaders from government agencies, international organisations and the private sector gathered to address the growing complexity of global tax disputes.

A key theme that emerged throughout the discussions was one that resonates for many multinationals today: How can companies gain certainty in an increasingly complex and unpredictable global tax environment?

From the U.S.–China tariff war to the OECD’s BEPS 2.0 reforms, international tax policy continues to evolve rapidly. In Singapore, transfer pricing audits are on the rise, as highlighted in RSM Singapore’s article “Navigating Transfer Pricing Audits in Singapore”, intensifying the need for businesses to maintain robust, defensible positions and transparent compliance.

Against this backdrop, companies are seeking forward-looking tools that can provide both certainty and risk mitigation.

The Advance Pricing Agreement (APA): A strategic pathway to certainty

An Advance Pricing Agreement (“APA”) is a binding arrangement between a taxpayer and the tax authority that agrees to the transfer pricing methodology for specified transactions for a defined period. It offers a practical solution to prevent future disputes and reduces the risk of double taxation, particularly valuable for companies involved in high-value, cross-border related-party transactions.

As explored in RSM Singapore’s article, “Is an APA Suitable for You?”, an APA may be particularly beneficial when:

• Long-term operational certainty is critical for strategic planning;
• There is potential exposure to transfer pricing audits or controversy;
• Intercompany pricing arrangements span multiple tax jurisdictions.

With the current environment characterised by unpredictability, the APA has become more than a compliance tool. It is a strategic instrument to pre-empt and manage international tax risks.

How today’s uncertainty is reshaping the Bilateral APA environment

Our ongoing discussions with various multinational companies reveal that today's uncertainty is significantly influencing how businesses approach bilateral APAs (“BAPAs”). Depending on their stage in the BAPA journey, companies are responding in different yet critical ways:

Considering an Application

For companies considering whether to pursue a BAPA, today’s climate reinforces the importance of obtaining transfer pricing certainty. An effective BAPA application requires a well-grounded approach. Businesses must develop detailed forecasts and incorporate critical assumptions that explicitly address areas of volatility such as supply chain changes, pricing shifts or geopolitical impacts. These assumptions provide flexibility to address future deviations while maintaining the integrity of the BAPA agreement.

Application in Progress

Companies already engaged in BAPA discussions with the relevant tax authorities should reassess and refine their submissions in light of emerging developments. This may include updating economic analyses, financial projections and re-evaluating comparability factors. Timely communication with tax authorities, especially where there are material updates or strategic shifts, helps to ensure that the BAPA agreement remains relevant and implementable.

BAPA in Execution

Having an active BAPA in place does not mark the end of the journey. Businesses should adopt a dynamic, “living” compliance approach, periodically assessing whether the agreed terms remain aligned with current operational realities. Where assumptions no longer hold, due to market disruptions, regulatory shifts or tax reforms, it is essential to maintain open and transparent engagement with tax authorities to explore alternative viable solutions. This not only strengthens trust but also demonstrates sound governance. 

Final thoughts: Certainty requires commitment

In today’s volatile climate, it is important to note that APA processes, especially bilateral ones, may require more time to conclude. Companies must be prepared to allocate adequate resources, coordination efforts and management attention throughout the APA lifecycle.

Equally important, tax authorities may not always have full visibility into sector-specific commercial dynamics. As such, taxpayers are encouraged to share relevant industry insights to foster mutual understanding and facilitate informed decision-making.

Certainty in today’s tax landscape is not a given. It is earned through preparation, transparency and sustained collaboration. For companies navigating cross-border transactions, the APA, whether unilateral or bilateral, remains a clear pathway forward.