China: Annual APA report

The State Taxation Administration on November 25, 2025, released the 16^th annual advance pricing agreement (APA) report, which systematically presents an overview of APAs, their development history, the latest mechanisms, operational standards, and implementation of APAs in China. It also provides a multidimensional data analysis on the APAs negotiated and signed between 2005 and 2024.

Overview

• The number of APAs signed annually has continued to increase. In 2024, the Chinese tax authorities signed 39 APAs, including 12 unilateral APAs and 27 bilateral APAs. Compared with the previous year (when 36 APAs were signed in 2023, including 9 unilateral APAs and 27 bilateral APAs), the overall upward trend persists.
• Bilateral APA applications have risen significantly. Of the 27 bilateral APAs signed in 2024, 22 were new agreements and five were renewals. In 2024, there were a total of 70 bilateral APAs at the intention stage, an increase of 10 compared to 2023. This indicates that, in an increasingly uncertain international tax environment, more cross-border taxpayers are seeking tax certainty through bilateral APAs.
• High signing efficiency was maintained. In terms of the time required to conclude an APA, all 12 unilateral APAs signed in 2024 were concluded within 24 months. Among 27 bilateral APAs, 13 were concluded within 24 months. According to the latest statistical data on MAP and APA released by the OECD in 2024, the APA closure rate in the Chinese Mainland was 24.2%, far higher than the global average of 18.1%, ranking seventh among the jurisdictions surveyed.
• Actively expanding bilateral APA negotiation and signing countries and regions. Of the 170 bilateral APAs signed by the Chinese tax authorities between 2005 and 2024, 118 were signed with other Asian countries and regions, accounting for approximately 70% of the total. A total of 33 agreements were signed with European countries, representing around 20% of the bilateral APA volume. There were 18 agreements signed with North American countries and one with an Oceanian country. Among the 27 bilateral APAs signed in 2024, 19 were signed with other Asian countries and regions, six with European countries, and two with North American countries.
• While the focus remains on the manufacturing industry, the range of industries and types of related-party transactions are becoming increasingly diverse. In 2024, the Chinese tax authorities’ international tax services continued to focus primarily on the manufacturing industry. The manufacturing sector remains the main industry for APA signings, although there has been an increase in negotiations in other industries, such as wholesale and retail. In terms of the types of related transactions involved, there were 22 cases involving tangible assets, 12 cases concerning intangible assets, and eight cases involving services.
• The transactional net margin method (TNMM) remains predominant, while other testing methods are also leveraged. As of 2024, among the signed APAs, the TNMM is the most frequently used method, having been used 328 times and accounting for 83.9% of all transfer pricing methods adopted. Meanwhile, the Chinese tax authorities are actively seeking to evaluate the significant contributions of transaction parties to value creation, as well as special factors such as market premium and cost savings, through the use of other methods. Other transfer pricing methods have also been applied in signed APAs where appropriate: the cost-plus method (CPM) has been used 21 times, the profit split method (PSM) 14 times, and the comparable uncontrolled price (CUP) method 12 times. Among the 39 APA cases successfully signed in 2024, the TNMM was used 29 times, the CUP method twice, and the resale price method (RPM) once.

KPMG observation

The overall trend of APA development in China exhibits the following characteristics:

• An increasing number of multinational enterprises are applying for bilateral APAs.
• APA acceptance and review are becoming stricter.
• Reasonable use of international tax cooperation mechanisms to safeguard legitimate rights.

For more information, contact a KPMG tax professional in China:

Fiona Yu | fiona.yu@kpmg.com