History of APA. Japan was the first country to implement APA legislation in the middle of the 80’s, followed by the U.S. in 1991, after this the APA boom started and countries such as New Zeeland (1994), Canada (1994), Australia (1995) and Mexico (1995) implemented similar APA legislations (Xxxxxxx, 2007). In the U.S., the idea of an APA was discussed in the 1980s and the idea was derived from the lack of a reliable method for determining TP that was certain to be acceptable to the Internal Revenue Service (IRS) in the event of an audit (Xxxxxxxx, 1998) (Xxxxxx, 1997). The APA program was developed as an alternative means of prospectively resolving intercompany pricing issues through a negotiated agreement between the corporation and the IRS and when relevant a foreign taxing authority. In other words, APA was firstly developed as a means of solving TP disputes (Fallon, 1997). IRS developed a new practical and workable set of TP rules that would reduce uncertainty and promote voluntary compliance while diminishing the burdens to both corporation as well as the IRS (Xxxxxx, 1997). Due to the success of an APA, other countries all over the world have implemented the APA program (Xxxxxxxx, 1998). European countries can be said to have started their development around APA regulations during the start of the 21st century, France established their regulations during 1999, Germany in August 2000, the Netherlands in 2001, and Belgium in 2002. The reason for the development concerning APA legislation is believed to be the implementation of APA in the OECD TP guidelines during 1999 (Xxxxxxxx, 2005).
