Disadvantages of APA. A downside with the APA is the heavy requirements of documentation that are needed for the procedure of conducting an APA, the reason for this burden of documentation requirements are that the APA will be valid for somewhere around three to five years and therefore the need for relevant information is big (Jernkrok and Xxxxxxxx, 2009). The implementation of APA legislations will at the start place a strain on TP audit resources. This since resources which have been earmarked for other purposes such as advising, litigation and examination are now used for the APA program. Corporations which have applied for APAs want to have it issued as soon as possible and will therefore place demands on the tax authorities, demands which will not coincide with the resource planning of the tax authorities. This will make it difficult to conduct the process of APA efficient and also maintaining the efficiency of other equally important work. However, the renewal process of an APA is believed to be less of a burden for the tax authorities. When placing too big of a focus on issuing APAs, the tax 6 An example showing the potential cost savings as a consequence of the APA is included in Appendix 6. authorities will face the risk of losing resources which can be better deployed in reducing the risk of losing tax revenues. It is not only on the tax authorities where an administrative burden will be placed, an APA can crave more corporation and detailed industry specific information than other TP examinations will. Other concerns that arise with APA are that a closer study of transactions can be performed, than is the case of normal TP examinations, since the corporation has to provide for detailed information. At the same time the corporations are not in any way sheltered from TP examinations, just because they apply for an APA. If a corporation have an APA, they might still have to prove that they have fulfilled the terms and conditions of the APA (OECD TP guidelines, 1995). Even if an APA is used, and brings with it a greater certainty, this is not equal to that the TP used before the APA was implemented will not be subject for future investigations (Mehafdi, 2000). Due to this it is crucial that tax authorities try to ensure that the procedure of an APA will not be too burdensome for corporations, and that the demands placed on the corporations are not in any way larger than the scope of the APA application (OECD TP guidelines, 1995). One further disadvantage with the APA is...
