---
title: "Advance Pricing Agreement (APA): Meaning & Types"
description: "An Advance Pricing Agreement (APA) sets a binding transfer-pricing method between taxpayers and tax authorities."
url: "https://modeldiplomat.com/learn/glossary/advance-pricing-agreement"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- An Advance Pricing Agreement is a binding arrangement between a taxpayer and one or more tax authorities that fixes the transfer-pricing method for cross-border intra-group transactions over a defined period.
- What is the difference between a unilateral and a bilateral APA?
- How does an APA differ from the Mutual Agreement Procedure?
- What is a rollback provision in an APA?
- Can an APA be cancelled once signed?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

An Advance Pricing Agreement is a binding arrangement between a taxpayer and one or more tax authorities that fixes the transfer-pricing method for cross-border intra-group transactions over a defined period.

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In 2016 India's CBDT and the United States IRS signed their first bilateral Advance Pricing Agreement, resolving the transfer pricing of an IT-services entity and clearing a backlog of US-India competent-authority cases.

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