Announcement 2023-10
Internal Revenue Service
2023-16 I.R.B. 663
     
     
     
 Announcement and Report Concerning Advance Pricing Agreements      
     
 March 27, 2023      
     
 Announcement 2023-10      
     
This Announcement is issued pursuant to § 521(b) of Pub. L. 106-170, the Ticket to Work and Work Incentives Improvement Act of 1999, which requires the Secretary of the Treasury to report annually to the public concerning advance pricing agreements (APAs) and the Advance Pricing and Mutual Agreement Program (APMA Program), formerly known as the Advance Pricing Agreement Program (APA Program). The first report covered calendar years 1991 through 1999. Subsequent reports covered each calendar year 2000 through 2021 separately. This twenty-fourth report describes the experience, structure, and activities of the APMA Program during calendar year 2022. It does not provide guidance regarding the application of the arm's length standard.
   
Part I of this report includes information on the structure, composition, and operation of the APMA Program; Part II presents statistical data; and Part III includes general descriptions of various elements of the APAs executed in 2022, including types of transactions covered, transfer pricing methods used, and completion time.
   
John M. Wall
Acting Director, APMA Program
   
Part I. The APMA Program - Structure, Composition, and Operation   
[Pub. L. 106-170 § 521(b)(2)(A)] 
   
In   February    2012,    the    former    APA    Program    was    moved    from    the    Office    of    Chief    Counsel    to    the    Office    of    Transfer    Pricing    Operations  1   within the Large Business and International Division of the IRS and combined with the U.S. Competent Authority staff responsible for transfer pricing cases, thereby forming the APMA Program (APMA).   
     
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1    In    2017,    Transfer    Pricing    Operations    became    Treaty    &    Transfer    Pricing    Operations    ("TTPO").     
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As    of    December    31,    2022,    APMA's    APA    cases    were    handled    by    59    team    leaders,    26    economists,    9    managers,    and    3    assistant    directors.  2   Each assistant director oversees three managers who lead teams consisting of both team leaders and economists. APMA's main office is in Washington, DC, and it also has offices in northern California (San Francisco and San Jose), southern California (Los Angeles and Laguna Niguel), Chicago, and New York.   
     
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2    In late 2020, TTPO's Treaty Assistance and Interpretation Team (TAIT) joined APMA, bringing the total number of groups in APMA to four. The three legacy APMA groups have primary responsibility for cases arising under the business profits and associated enterprises articles of U.S. tax treaties. TAIT endeavors to resolve competent authority issues arising under all other articles of U.S. tax treaties including issues arising under U.S. tax treaties relating to estate and gift taxes. As such, TAIT is separate from APMA's APA program, and the total numbers of team leaders and managers handling APA cases do not include TAIT analysts and managers.   
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On August 31, 2015, a new revenue procedure governing APA applications was published in 2015-35 I.R.B. on page 263. Revenue Procedure (Rev. Proc.) 2015-41 provides guidance, information and instructions on APA requests and the administration of APAs. Rev.    Proc.    2015-41    updates    and    supersedes    Rev.    Proc.    2006-9,    2006-1    C.B.    278,    as    modified    by    Rev.    Proc.    2008-31,    2008-1    C.B.    1133, which is also superseded.   
     
Model APAs appear as appendices to this report. Appendix 1 is the model for APAs covered byRev. Proc. 2006-9. Appendix 2 is the current model APA for APAs covered by Rev. Proc. 2015-41. A list of primary APMA contacts is available at https://www.irs.gov/businesses/corporations/apma-contacts.   
     
 Part II. APMA Program Statistical Data    
 [Pub. L. 106-170 § 521(b)(2)(C)(1-viii)]    
     
 Table 1: APA Application Filed    
 § 521(b)(2)(C)(i)    
     
                              
     
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 3       The first APA Statutory Report, which compiled APA data from 1991-1999, did not report the cumulative number of applications for those years by submission type, so the cumulative totals cannot be reported in that manner.   
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The charts above illustrate the number of complete applications filed per year and the percentage of bilateral requests received in 2022 per foreign country. As of December 31, 2022, APMA had also received 34 user fee filings that were not yet accompanied by a substantially complete APA application, in addition to the 183 complete APA applications.   
     
 Table 2: Executed 4  and Pending APAs    
 § 521(b)(2)(C)(ii-vi)    
     
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 4       "Executed APAs" refers to APAs that were finalized and includes both initial and renewal APAs.   
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 5       The number of renewals executed is included in the total number of APAs executed during the year.   
     
 6       The number of renewals still pending as of year-end is also included in the total number of pending APAs.   
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In 2022, the percentage of renewals executed decreased (55 percent of all APAs executed in 2022 versus 63 percent in 2021). The charts above illustrate trends in the number of APAs executed per year and the countries involved in the bilateral APAs that were executed in 2022.   
     
           
     
           
     
As the top chart illustrates, the number of pending requests increased relative to December 31, 2021. As of December 31, 2022, almost half of the pending bilateral APA requests involved either Japan or India.   
     
 Table 3: APAs Revoked or Cancelled and Applications Withdrawn    
 § 521(b)(2)(C)(vii)    
     
           
     
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 7       The first APA Statutory Report, which compiled APA data from 1991-1999, and the second APA Statutory Report, which compiled APA data for 2000, did not report the cumulative number of applications for those years by submission type, so the cumulative totals cannot be reported in that manner.   
     
 8        See supra    note 7.   
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 Table 4: APAs Executed in 2022 by Industry    
 § 521(b)(2)(C)(viii)    
     
           
     
           
     
 Table 4a: Manufacturing APAs Executed in 2022    
     
           
     
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 9       Industries in the Miscellaneous Manufacturing subsector (NAICS Code 339) make a wide range of products that cannot readily be classified in specific NAICS manufacturing subsectors.   
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 Table 4b: Wholesale/Retail Trade APAs Executed in 2022    
     
           
     
           
     
 Part III. General Descriptions of APAs Executed in 2022    
 [Pub. L. 106-170 § 521(b)(2)(D) and (E)]    
     
 Nature of the Relationships    
 § 521(b)(2)(D)(i)      
     
 Relationships between Controlled Parties      
     
           
     
As in prior years, more than half of the APAs executed in 2022 involved transactions between non-U.S. parents and U.S. subsidiaries.   
     
 Covered Transactions, Functions and Risks, and Tested Parties    
 § 521(b)(2)(D)(ii-iii)      
     
           
     
Most of the transactions 10  covered in APAs executed in 2022 involve the sale of tangible goods or the provision of services. Twenty-two percent of the transactions involve the use of intangible property, which can be among the most challenging transactions in APMA's inventory.   
     
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 10       APAs often cover more than one type of transaction.     
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In the majority of APAs, the covered transactions involve numerous business functions and risks. For instance, with respect to functions, APAs involving manufactured products typically involve a controlled group that conducts research and development (R&D), engages in product design and engineering, manufactures the product, markets and distributes the product, and performs support functions such as legal, finance, and human resources. Regarding risks, the controlled group may assume a variety of risks, including market risks, R&D risks, financial risks, credit and collection risks, product liability risks, and general business risks. In the APA evaluation process, a significant amount of time and effort is devoted to understanding how the functions and risks are allocated among the controlled group of companies that are party to the covered transactions. For methods requiring the selection of a tested party, the tested party chosen generally will be the least complex of the controlled taxpayers.   
     
           
     
Consistent with prior years, a majority of tested parties 11  in 2022 were U.S. distributors, U.S. manufacturers, or U.S. service providers.   
     
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11    Not all the executed APAs involve a tested party. 
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 Transfer Pricing Methods Used    
 § 521(b)(2)(D)(iv)      
     
In 2022, the most commonly used transfer pricing method (TPM) for both the sale of tangible property and the use of intangible property continued to be the comparable profits method/transactional net margin method (CPM/TNMM). The CPM/TNMM was used for 77 percent of these types of transactions.   
     
For covered transactions involving tangible and intangible property that used the CPM/TNMM, the operating margin (OM) is still the most common profit level indicator (PLI) used to benchmark results. It was used 73 percent of the time. Other PLIs, such as the Berry Ratio and return on total cost, made up the other 27 percent. As used here, "OM" is defined as the ratio of operating profit to sales, 12  and "Berry Ratio" is defined as the ratio of gross profit to operating expenses. 13  Most services transactions (80 percent) also used the CPM/TNMM with the OM and operating profit to operating expense being the most common PLIs (used 53 percent of the time). 14    
     
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12     See    Treas.Reg. § 1.482-5(b)(4)(ii)(A).   
     
13     See    Treas.Reg. § 1.482-5(b)(4)(ii)(B).   
     
14    The majority of APAs that covered services transactions also included tangible/intangible transactions and are not tested under a separate PLI.   
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 Sources of Comparables, Comparables Selection Criteria, and Nature of Adjustments to Comparables or Tested Party Data    
 § 521(b)(2)(D)(v-vii)      
     
For the APAs executed in 2022 that involved the CPM/TNMM with a North American tested party, the most widely used data source for comparables was Standard and Poor's Compustat/Capital IQ database. Different sources were used in other cases (e.g., where the tested party was not a U.S. or Canadian entity or where transaction-based methods were applied). The other most commonly used databases are listed in the table below.   
     
 Table 5: Sources of Comparable Data      
   
       
   
In making comparability adjustments, typical balance sheet adjustments, as identified in Treas.Reg. §§ 1.482-1(d)(2) and 1.482-5(c)(2)(iv), were made in most cases, including where appropriate, adjustments for payables, receivables, inventory, and fixed assets. In addition, where appropriate, adjustments for different accounting practices were made to convert from LIFO to FIFO inventory accounting, and a small number of cases involved the accounting reclassification of expenses, e.g., from COGS to operating expenses.
   
Ranges, Goals, and Adjustment Mechanisms   
§ 521(b)(2)(D)(viii-ix) 
   
Most transactions covered in APAs target an interquartile range or point within the interquartile range as described in Treas.Reg. § 1.482-1(e)(2)(iii)(C), and other targeted arm's length ranges. Where the transaction involves a royalty payment for the use of intangible   property,    both    specific    royalty    rates    and    ranges    have    been    used.    Where    the    covered    transaction    is    the    sale    or    license    of    intangible property, and the payment for such transfer would be a royalty based solely on external comparable uncontrolled transactions, a secondary or confirming method, e.g.,  a test of the post-royalty operating margin or cost-plus mark-up, has sometimes also been used. The testing periods of the APAs executed in 2022 were either a single year, the term of the APA only, or the term of the APA plus rollback years.   
     
APAs executed in 2022 included several mechanisms for making adjustments to the tested party's results when the results fall outside the interquartile range or do not match the point required by the APA. Examples of the mechanisms used include an adjustment bringing the tested party's results for a single year to either the closer edge of the range or the median of the range, an adjustment to bring the results over the APA term to the closer edge of the range, or an adjustment to bring the results to a specified point or royalty rate.   
     
 Critical Assumptions    
 § 521(b)(2)(D)(v)      
     
The model APAs used by the IRS (included as Appendix 1 and Appendix 2 of this report) include standard critical assumptions that there    will    be    no    material    changes    to    the    taxpayer's    business    or    to    its    tax    or    financial    accounting    practices    during    the    APA    term.    A    few    bilateral    cases    have    also    included    critical    assumptions    tied    to    the    taxpayer's    profitability    in    a    certain    year    or    over    the    term    of    the    APA.    Pursuant    to    §    7.06(3)    of    Rev.    Proc.    2015-41,    APMA    will    cancel    an    APA    in    the    event    of    a    failure    of    a    critical    assumption    unless    the    parties agree to revise the APA.   
     
 Term Lengths of APAs Executed in 2022    
 § 521(b)(2)(D)(x)      
     
 Table 6: Term Lengths of APAs Executed in 2022      
     
           
     
As   described    in    §    3.03(1)    of    Rev.Proc.    2015-41,    taxpayers    should    request    an    APA    term    that    will    cover    at    least    five    prospective    years    and may also request that the APA be "rolled back" to cover one or more earlier taxable years, although the appropriate APA term is decided on a case-by-case basis. Of the APAs executed in 2022, 16 percent included rollback years. A substantial number of those APAs with terms of greater than five years were submitted as a request for a five-year term, and the additional years were agreed to between the taxpayer and the IRS (or, in the case of a bilateral APA, between the IRS and the foreign government upon the taxpayer's request) to ensure a reasonable amount of prospectivity in the APA term.   
     
 Amount of Time Taken to Complete New and Renewal APAs    
 § 521(b)(2)(E)      
     
 Table 7: Months to Complete New and Renewal APAs Executed in 2022      
   
       
   
       
   
Median completion time continued to rise in 2022 to 43.4 months (from 35.1 months in 2021and 32.7 months in 2020).
   
Efforts to Ensure Compliance with APAs   
§ 521(b)(2)(F) 
   
As described in § 7.02(1) of Rev.Proc. 2015-41, taxpayers are required to file annual reports to demonstrate compliance with the terms and conditions of their APAs. The filing and review of these annual reports are critical parts of the APA process. Through annual report review, the APMA Program monitors taxpayer compliance with APAs on a contemporaneous basis. Annual report review also provides current information on the success or problems associated with the various TPMs adopted in the APA process.
   
Nature of Documentation Required in Annual Report   
§ 521(b)(2)(D)(xi) 
   
APAs require taxpayers to file timely and complete annual reports describing their operations and demonstrating compliance with the APA's terms and conditions. Not every annual report will include each of the items listed in the following table; they are required where the facts demonstrate a need for such documentation. The requirements for the information to be included in a specific APA annual report is included in Appendix C of the executed APA.
   
       
   
Approaches for Sharing of Currency or Other Risks   
§ 521(b)(2)(D)(xii) 
   
In appropriate cases, APAs may provide specific approaches for dealing with risks, including currency risk, such as adjustment mechanisms and/or critical assumptions.
   
   
APPENDIX 1- Model APA (based on Rev. Proc. 2006-9) 
   
ADVANCE PRICING AGREEMENT 
   
between 
   
[ Insert Taxpayer's Name ] 
   
and 
   
THE INTERNAL REVENUE SERVICE 
   
PARTIES 
   
The Parties to this Advance Pricing Agreement (APA) are the Internal Revenue Service (IRS) and [ Insert Taxpayer's Name ], EIN ________.
   
RECITALS 
   
[ Insert Taxpayer Name ] is the common parent of an affiliated group filing consolidated U.S. tax returns (collectively referred to as "Taxpayer")   and    is    entering    into    this    APA    on    behalf    of    itself    and    other    members    of    its    consolidated    group.   
     
Taxpayer's principal place of business is [ City,  State ]. [ Insert general description of taxpayer and other relevant parties ].   
     
This APA contains the Parties' agreement on the best method for determining arm's-length prices of the Covered Transactions under I.R.C. section 482, the Treasury Regulations thereunder, and any applicable tax treaties.   
     
 {If renewal, add}   [Taxpayer    and    IRS    previously    entered    into    an    APA    covering    taxable    years    ending    _____    to    ______,    executed    on    ________.]   
     
 AGREEMENT      
     
The Parties agree as follows:   
     
1. Covered Transactions. This    APA    applies    to    the    Covered    Transactions,    as    defined    in    Appendix    A.   
     
2. Transfer Pricing Method. Appendix A sets forth the Transfer Pricing Method (TPM) for the Covered Transactions.   
     
3. Term.    This    APA    applies    to    the    APA    Term,    as    defined    in    Appendix    A.   
     
4. Operation.    
     
a. Revenue    Procedure    2006-9    governs    the    interpretation,    legal    effect,    and    administration    of    this    APA.   
     
b. Nonfactual oral and written representations, within the meaning of sections 10.04 and 10.05 of Revenue Procedure 2006-9 (including any proposals to use particular TPMs), made in conjunction with the APA Request constitute statements made in compromise negotiations within the meaning of Rule 408 of the Federal Rules of Evidence.   
     
5. Compliance.    
     
a. Taxpayer must report its taxable income in an amount that is consistent with Appendix A and all other requirements of this APA    on    its    timely    filed    U.S.    Return.    However,    if    Taxpayer's    timely    filed    U.S.    Return    for    any    taxable    year    covered    by    this    APA    (APA    Year)    is    filed    prior    to,    or    no    later    than    60    days    after,    the    effective    date    of    this    APA,    then    Taxpayer    must    report    its    taxable income for that APA Year in an amount that is consistent with Appendix A and all other requirements of this APA either on the original U.S. Return or on an amended U.S. Return filed no later than 120 days after the effective date of this APA, or through such other means as may be specified herein.   
     
b. { Use or edit the following when U.S. Group or Foreign Group contains more than one member.} [This APA addresses the arm's-length nature of prices charged or received in the aggregate between Taxpayer and Foreign Participants with respect to the Covered Transactions. Except as explicitly provided, this APA does not address and does not bind the IRS with respect to prices charged or received, or the relative amounts of income or loss realized, by particular legal entities that are members of U.S. Group or that are members of Foreign Group.]   
     
c. For each APA Year, if Taxpayer complies with the terms and conditions of this APA, then the IRS will not make or propose any allocation or adjustment under I.R.C. section 482 to the amounts charged in the aggregate between Taxpayer and Foreign Participant[s] with respect to the Covered Transactions.   
     
d. If Taxpayer does not comply with the terms and conditions of this APA, then the IRS may:   
     
i. enforce the terms and conditions of this APA and make or propose allocations or adjustments under I.R.C. section 482 consistent with this APA;   
     
ii. cancel or revoke this APA under section 11.06 of Revenue Procedure 2006-9; or   
     
iii. revise this APA, if the Parties agree.   
     
e. Taxpayer    must    timely    file    an    Annual    Report    (an    original    and    four    copies)    for    each    APA    Year    in    accordance    with    Appendix    C    and    section    11.01    of    Revenue    Procedure    2006-9.    Taxpayer    must    file    the    Annual    Report    for    all    APA    Years    through    the    APA    Year    ending    [insert    year]    by    [insert    date].    Taxpayer    must    file    the    Annual    Report    for    each    subsequent    APA    Year    by    [insert    month    and    day]    immediately    following    the    close    of    that    APA    Year.    (If    any    date    falls    on    a    weekend    or    holiday,    the    Annual    Report shall be due on the next date that is not a weekend or holiday.) The IRS may request additional information reasonably necessary to clarify or complete the Annual Report. Taxpayer will provide such requested information within 30 days. Additional time may be allowed for good cause.   
     
f. The IRS will determine whether Taxpayer has complied with this APA based on Taxpayer's U.S. Returns, the Financial Statements, and other APA Records, for the APA Term and any other year necessary to verify compliance. For Taxpayer to comply with this APA, {use the following or an alternative}  an independent certified public accountant must render an opinion    that    Taxpayer's    Financial    Statements    present    fairly,    in    all    material    respects,    Taxpayer's    financial    position    under    U.S.    GAAP.   
     
g. In accordance with section 11.04 of Revenue Procedure 2006-9, Taxpayer will (1) maintain the APA Records, and (2) make them available to the IRS in connection with an examination under section 11.03. Compliance with this subparagraph constitutes compliance with the record-maintenance provisions of I.R.C. sections 6038A and 6038C for the Covered Transactions for any taxable year during the APA Term.   
     
h. The True Taxable Income within the meaning of Treasury Regulations sections 1.482-1(a)(1) and (i)(9) of a member of an affiliated group filing a U.S. consolidated return will be determined under the I.R.C. section 1502 Treasury Regulations.   
     
i. {Optional for US Parent Signatories}  To the extent that Taxpayer's compliance with this APA depends on certain acts of Foreign Group members, Taxpayer will ensure that each Foreign Group member will perform such acts.   
     
6. Critical Assumptions.  This APA's critical assumptions, within the meaning of Revenue Procedure 2006-9, section 4.05, appear in Appendix B. If any critical assumption has not been met, then Revenue Procedure 2006-9, section 11.06, governs.   
     
7. Disclosure.     This    APA,    and    any    background    information    related    to    this    APA    or    the    APA    Request,    are:    (1)    considered    "return    information" under I.R.C. section 6103(b)(2)(C); and (2) not subject to public inspection as a "written determination" under I.R.C. section 6110(b)(1). Section 521(b) of Pub. L. 106-170 provides that the Secretary of the Treasury must prepare a report for public disclosure    that    includes    certain    specifically    designated    information    concerning    all    APAs,    including    this    APA,    in    a    form    that    does    not reveal taxpayers' identities, trade secrets, and proprietary or confidential business or financial information.   
     
8. Disputes.  If a dispute arises concerning the interpretation of this APA, the Parties will seek a resolution by the Director of the Advance Pricing and Mutual Agreement Program, to the extent reasonably practicable, before seeking alternative remedies.   
     
9. Materiality.  In this APA the terms "material" and "materially" will be interpreted consistently with the definition of "material facts" in Revenue Procedure 2006-9, section 11.06(4).   
     
10. Section Captions.  This APA's section captions, which appear in italics, are for convenience and reference only. The captions do not affect in any way the interpretation or application of this APA.   
     
11. Terms and Definitions. Unless otherwise specified, terms in the plural include the singular and vice versa. Appendix D contains definitions for capitalized terms not elsewhere defined in this APA.   
     
12. Entire Agreement and Severability.  This APA is the complete statement of the Parties' agreement. The Parties will sever, delete, or reform any invalid or unenforceable provision in this APA to approximate the Parties' intent as nearly as possible.   
     
13. Successor in Interest.     This    APA    binds,    and    inures    to    the    benefit    of,    any    successor    in    interest    to    Taxpayer.   
     
14. Notice.  Any notices required by this APA or Revenue Procedure 2006-9 must be in writing. Taxpayer will send notices to the IRS at the address and in the manner set forth in Revenue Procedure 2006-9, section 4.11. The IRS will send notices to:   
     
           
     
15. Effective Date and Counterparts.  This APA is effective starting on the date, or later date of the dates, upon which all Parties execute this APA. The Parties may execute this APA in counterparts, with each counterpart constituting an original.   
     
  WITNESS,       
     
The Parties have executed this APA on the dates below.   
     
 [Taxpayer Name in all caps]      
     
By: ___________________________  Date: ___________________, 201___   
  Jane Doe   
  Sr. Vice President (Taxes)   
     
 IRS      
     
By: ___________________________  Date: ___________________, 201___   
  John M. Wall   
  Acting Director, Advance Pricing and   
  Mutual Agreement Program   
     
     
 APPENDIX A      
     
 COVERED TRANSACTIONS AND TRANSFER PRICING METHOD (TPM)      
     
 1.  Covered Transactions.      
  [ Define the Covered Transactions. ]   
     
 2.  APA Term.      
    This APA applies to Taxpayer's taxable years ending __________ through ________ (APA   
  Term).   
     
 3.  TPM.      
  { Note: If appropriate, adapt language from the following examples. }   
     
  [The    Tested    Party    is    __________.]   
     
 - CUP Method      
     
The TPM is the comparable uncontrolled price (CUP) method. The Arm's Length Range of the price charged for _________ is between _______ and ___________ per unit.   
     
 - CUP Method      
     
The TPM is the CUT Method. The Arm's Length Range of the royalty charged for the license of ______is between ____%    and    ___    %    of    [Taxpayer's,    Foreign    Participants',    or    other    specified    party's]    Net    Sales    Revenue.    [Insert    definition of net sales revenue or other royalty base.]   
     
 - Resale Price Method (RPM)      
     
The    TPM    is    the    resale    price    method    (RPM).    The    Tested    Party's    Gross    Margin    for    any    APA    Year    is    defined    as    follows:    the    Tested    Party's    gross    profit    divided    by    its    sales    revenue    (as    those    terms    are    defined    in    Treasury    Regulations    sections 1.482-5(d)(1) and (2)) for that APA Year. The Arm's Length Range is between ____% and  ___ %, and the Median of the Arm's Length Range is ___%.   
     
 - Cost Plus Method      
     
The    TPM    is    the    cost    plus    method.    The    Tested    Party's    Cost    Plus    Markup    is    defined    as    follows    for    any    APA    Year:    the    Tested    Party's    ratio    of    gross    profit    to    production    costs    (as    those    terms    are    defined    in    Treasury    Regulations    sections    1.482-3(d)(1)    and    (2))    for    that    APA    Year.    The    Arm's    Length    Range    is    between    ___%    and    ___%,    and    the    Median    of    the Arm's Length Range is ___%.   
     
 - CPM with Berry Ratio PLI      
     
The    TPM    is    the    comparable    profits    method    (CPM).    The    profit    level    indicator    is    a    Berry    Ratio.    The    Tested    Party's    Berry    Ratio    is    defined    as    follows    for    any    APA    Year:    the    Tested    Party's    gross    profit    divided    by    its    operating    expenses    (as    those    terms    are    defined    in    Treasury    Regulations    sections    1.482-5(d)(2)    and    (3))    for    that    APA    Year.    The    Arm's    Length Range is between ____ and  ___, and the Median of the Arm's Length Range is ___.   
     
 - CPM using an Operating Margin PLI      
     
The    TPM    is    the    comparable    profits    method    (CPM).    The    profit    level    indicator    is    an    operating    margin.    The    Tested    Party's    Operating    Margin    is    defined    as    follows    for    any    APA    Year:    the    Tested    Party's    operating    profit    divided    by    its    sales    revenue    (as    those    terms    are    defined    in    Treasury    Regulations    section    1.482-5(d)(1)    and    (4))    for    that    APA    Year.    The    Arm's Length Range is between ____% and  ___ %, and the Median of the Arm's Length Range is ___%.   
     
 -      CPM      using      a      Three-year      Rolling      Average      Operating      Margin      PLI      
     
The    TPM    is    the    comparable    profits    method    (CPM).    The    profit    level    indicator    is    an    operating    margin.    The    Tested    Party's    Three-Year    Rolling    Average    operating    margin    is    defined    as    follows    for    any    APA    Year:    the    sum    of    the    Tested    Party's    operating    profit    (within    the    meaning    of    Treasury    Regulation    section    1.482-5(d)(4)    for    that    APA    Year    and    the    two preceding years, divided by the sum of its sales revenue (within the meaning of Treasury Regulation section 1.482-5(d)(1)) for that APA Year and the two preceding years. The Arm's Length Range is between ____% and ____%, and the Median of the Arm's Length Range is ___%.   
     
 -      Residual      Profit      Split      Method      
     
The TPM is the residual profit split method. [I nsert description of routine profit level determinations and residual profit-split mechanism ].   
     
  [ Insert additional provisions as needed. ]   
     
 4.  Application of TPM.      
     
For    any    APA    Year,    if    the    results    of    Taxpayer's    actual    transactions    produce    a    [price    per    unit,    royalty    rate    for    the    Covered    Transactions]    [or]    [Gross    Margin,    Cost    Plus    Markup,    Berry    Ratio,    Operating    Margin,    Three-Year    Rolling    Average    Operating    Margin    for    the    Tested    Party]    within    the    Arm's    Length    Range,    then    the    amounts    reported    on    Taxpayer's    U.S.    Return    must    clearly reflect such results.   
     
For    any    APA    year,    if    the    results    of    Taxpayer's    actual    transactions    produce    a    [price    per    unit,    royalty    rate]    [or]    [Gross    Margin,    Cost    Plus    Markup,    Berry    Ratio,    Operating    Margin,    Three-Year    Rolling    Average    Operating    Margin    for    the    Tested    Party]    outside    the    Arm's    Length    Range,    then    amounts    reported    on    Taxpayer's    U.S.    Return    must    clearly    reflect    an    adjustment    that    brings    the    [price    per    unit,    royalty    rate]    [or]    [Tested    Party's    Gross    Margin,    Cost    Plus    Markup,    Berry    Ratio,    Operating    Margin,    Three-Year    Rolling    Average    Operating    Margin]    to    the    Median.   
     
For    purposes    of    this    Appendix    A,    the    "results    of    Taxpayer's    actual    transactions"    means    the    results    reflected    in    Taxpayer's    and    Tested    Party's    books    and    records    as    computed    under    U.S.    GAAP    [ insert another relevant accounting standard if applicable ], with the following adjustments:   
     
(a)    [The    fair    value    of    stock-based    compensation    as    disclosed    in    the    Tested    Party's    audited    financial    statements    shall    be    treated as an operating expense]; and   
     
(b) To the extent that the results in any prior APA Year are relevant (for example, to compute a multi-year average), such results    shall    be    adjusted    to    reflect    the    amount    of    any    adjustment    made    for    that    prior    APA    Year    under    this    Appendix    A.   
     
 5.  APA Revenue Procedure Treatment      
     
If    Taxpayer    makes    an    adjustment    under    paragraph    4    of    this    Appendix    A    (a    "primary    adjustment"),    Taxpayer    and    its    related    foreign    entity    may    elect    APA    Revenue    Procedure    Treatment    in    accordance    with    section    11.02(3)    of    Revenue    Procedure    2006-9 and avoid the possible adverse tax consequences of a secondary adjustment that would otherwise follow the primary adjustment.   
     
[ Insert additional provisions as needed. ]   
     
     
 APPENDIX B      
     
 CRITICAL ASSUMPTIONS      
     
This APA's critical assumptions are:   
     
1. The business activities, functions performed, risks assumed, assets employed, and financial and tax accounting methods and classifications    [and    methods    of    estimation]    of    Taxpayer    in    relation    to    the    Covered    Transactions    will    remain    materially    the    same    as    described or used in Taxpayer's APA Request. A mere change in business results will not be a material change.   
     
[ Insert additional provisions as needed. ]   
     
     
 APPENDIX C      
     
 APA RECORDS AND ANNUAL REPORT      
     
APA RECORDS     
     
The APA Records will consist of all documents listed below for inclusion in the Annual Report, as well as all documents, notes, work papers, records, or other writings that support the information provided in such documents.   
     
 ANNUAL REPORT      
     
The Annual Report (and each of the four copies required by paragraph 5(e) of this APA) will include:   
     
1. Two copies of a properly completed APA Annual Report Summary in the form of Appendix E to this APA, one copy of the form bound with, and one copy provided separately from, the rest of the Annual Report.   
     
2. A table of contents, organized as follows:   
     
3. Statements    that    fully    identify,    describe,    analyze,    and    explain:   
     
a. All    material    differences    between    the    U.S.    Group's    business    operations    (including    functions,    risks    assumed,    markets,    contractual terms, economic conditions, property, services, and assets employed) during the APA Year from the business operations described in the APA Request. If there have been no material differences, the Annual Report will include a statement to that effect.   
     
b. All    material    differences    between    the    U.S.    Group's    accounting    methods    and    classifications,    and    methods    of    estimation    used    during the APA Year, from those described or used in the APA Request. If any change was made to conform to changes in U.S. GAAP (or other relevant accounting standards) Taxpayer will specifically identify the change. If there has been no material change in accounting methods and classifications or methods of estimation, the Annual Report will include a statement to that effect.   
     
c. Any change to the Taxpayer notice information in paragraph 14 of this APA.   
     
d. Any failure to meet any critical assumption. If there has been no failure, the Annual Report will include a statement to that effect.   
     
e. Whether or not material information submitted while the APA Request was pending is discovered to be false, incorrect, or incomplete.   
     
f. Any change to any entity classification for federal income tax purposes (including any change that causes an entity to be disregarded for federal income tax purposes) of any Worldwide Group member that is a party to the Covered Transactions or is otherwise relevant to the TPM.   
     
g. The    amount,    reason    for,    and    financial    analysis    of    (1)    any    primary    adjustments    made    under    Appendix    A    for    the    APA    Year;    and    (2) any ( a ) secondary adjustments that follow such primary adjustments or ( b ) accounts receivable that Taxpayer establishes, in lieu of secondary adjustments, by electing APA Revenue Procedure Treatment pursuant to paragraph 5 of Appendix A and Revenue    Procedure    2006-9,    section    11.02(3),    for    the    APA    Year,    including    but    not    limited    to:   
     
i. the amounts due or owed, and paid or received by each affected entity;   
     
ii. the    character    (such    as    capital,    ordinary,    income,    expense)    and    country    source    of    the    funds    transferred,    and    the    specific    affected line item(s) of any affected U.S. Return;   
     
iii. the date(s) and means by which the payments are or will be made; and   
     
iv.    whether or not APA Revenue Procedure Treatment was elected pursuant to paragraph 5 of Appendix A and Revenue Procedure 2006-9, section 11.02(3).   
     
h. The    amounts,    description,    reason    for,    and    financial    analysis    of    any    book-tax    difference    relevant    to    the    TPM    for    the    APA    Year,    as    reflected    on    Schedule    M-1    or    Schedule    M-3    of    the    U.S.    Return    for    the    APA    Year.   
     
i. Whether Taxpayer contemplates requesting, or has requested, to renew, modify, or cancel the APA.   
     
4. The Financial Statements, and any necessary account detail to show compliance with the TPM, including consolidating financial statements, segmented financial data, records from the general ledger, or similar information if the assets, liabilities, income, or expenses relevant to showing compliance with the TPM are a subset of the assets, liabilities, income, or expenses presented in the Financial Statements.   
     
5. {Use the following or the alternative prescribed by paragraph 5(f) of this APA:}  A copy of the independent certified public accountant's opinion required by paragraph 5(f) of this APA.   
     
6. A    financial    analysis    that    reflects    Taxpayer's    TPM    calculations    for    the    APA    Year.    The    calculations    must    reconcile    with    and    reference the information required under item 4 above in sufficient account detail to allow the IRS to determine whether Taxpayer has complied with the TPM.   
     
7. An    organizational    chart    for    the    Worldwide    Group,    revised    annually    to    reflect    all    ownership    or    structural    changes    of    entities    that    are parties to the Covered Transactions or are otherwise relevant to the TPM.   
     
8. A copy of the APA and any amendment.   
     
9. A penalty of perjury statement, executed in accordance with Revenue Procedure 2006-9, section 11.01(6) and (7).   
     
     
 APPENDIX D      
     
 DEFINITIONS      
     
The following definitions control for all purposes of this APA. The definitions appear alphabetically below:   
     
           
   
   
APPENDIX E 
   
APA ANNUAL REPORT SUMMARY FORM 
   
The APA Annual Report Summary on the next page is a required APA Record. The APA Team Leader supplies some of the information requested on the form. Taxpayer is to supply the remaining information requested by the form and submit the form as part of its Annual Report.
   
       
   
   
APPENDIX 2- Model APA (based on Rev.Proc. 2015-41)
   
TEMPLATE FOR ADVANCE PRICING AGREEMENT 
   
UNDER REVENUE PROCEDURE 2015-41 
   
   
The Advance Pricing and Mutual Agreement Program ("APMA") of the Internal Revenue Service ("IRS") is providing this template for use in drafting advance pricing agreements ("APAs") issued under IRS Revenue Procedure 2015-41, 2015-35 I.R.B. 263   ("Rev.Proc.    2015-41").    This    template    is    designed    to    systematize    how    taxpayers    propose    terms    for    their    APAs    and    standardize    language    used    in    executed    APAs.    It    will    improve    efficiency    in    the    APA    process    and    enhance    consistency    in    the    administration    of    the    APA program.   
     
Rev.Proc.    2015-41    requires    that    taxpayers    include    as    part    of    a    complete    APA    request    a    draft    APA    and    a    "redline"    comparison    of    the    proposed draft APA against the current model APA. See  section 2.03, exhibit 15, of the Appendix to Rev. Proc. 2015-41. This template serves as the model APA. A taxpayer is required to produce the "redline" comparison by following the instructions below to edit this template    with    tracked    changes.    The    draft    APA    and    "redline"    comparison    are    then    to    be    included    in    Word    format    in    the    complete    APA    request. (Before editing the template with tracked changes, a taxpayer should remove this introduction and the instructions below from the Microsoft Word file.)   
     
The assigned APMA team will review the APA's terms proposed in the draft APA. If the APMA team accepts the proposed terms in light of its review of the taxpayer's complete APA request and other information obtained during the APA process, then the text of the    draft    APA,    edited    as    needed    to    fill    in    any    information    not    available    at    the    time    of    the    APA    Request,    will    be    adopted    as    the    text    of    a    finally    executed    APA.    If    the    APMA    team    does    not    accept    the    proposed    terms,    it    will    discuss    modifications    to    the    draft    APA    with    the    taxpayer during the APA process. For bilateral and multilateral APAs, the terms of the executed APA will of necessity be consistent with the terms of the underlying mutual agreement between the United States and one or more treaty partners.   
     
 GENERAL INSTRUCTIONS      
     
The template is designed to minimize editing by using an options-based format for selecting from terms presented in certain sections    of    the    model    APA.    The    options    presented    are    those    which    APMA    considers    standard    and    which    it    has    accepted    in    final    APAs.    These options are not binding on APMA, however. APMA reserves the right to modify the option selections, the specific option language used, or any other terms before executing an APA with the taxpayer.   
     
Options are indicated by square brackets ("[]"). An "x" should be inserted between the brackets to indicate the selected option ("[x]").    Options    that    are    not    selected    should    not    be    deleted,    but    instead    should    be    left    in    the    text    of    the    draft    APA.    The    options    to    which    APMA and the taxpayer ultimately agree for the final APA will be indicated by the presence or absence of an "x". The term associated with the "x" will be given operative effect in the executed APA.   
     
Certain    options    are    flagged    with    an    asterisk    after    the    square    brackets    ("[]*").    To    facilitate    the    APMA    team's    subsequent    review    of    the    draft    APA,    the    asterisks    should    not    be    deleted.    Taxpayers    that    select    flagged    options    are    required    to    specifically    provide    justification for the selection in the APA request. See  section 1.02, Part 5, of the Appendix to Rev. Proc. 2015-41.   
     
The template contains placeholder phrases consisting of a hashtag followed by one or more words in block capital letters (e.g.,    "#COUNTRY").    Generally,    the    taxpayer    should    replace    a    placeholder    phrase    with    appropriate    text,    subject    to    the    following    conventions:   
     
- If    a    placeholder    phrase    occurs    within    an    option    that    the    taxpayer    has    rejected,    the    taxpayer    should    change    the    hashtag    to    a    caret    (e.g.,    change    "#COUNTRY"    to    "^COUNTRY")    but    otherwise    leave    the    phrase    intact.  15   The caret indicates that the Taxpayer    has    rejected    this    option.    For    example,    for    a    bilateral    APA    with    Japan,    the    lines    on    the    first    page    just    below    the    title    would read:   
     
********   
15    As a result, almost all occurrences of the hashtag in the template will be replaced with a caret or other text in the taxpayer's draft APA. The few remaining occurrences of the hashtag will mark a placeholder phrase that cannot yet be replaced with appropriate text (see, for example,  the placeholder phrase in paragraph 6(e) for a date that cannot be determined until the APA nears execution). Searching the draft APA for the hashtag will locate all placeholder phrases that still need replacement.   
********   
     
  [x] Bilateral with Japan   
     
  [] Multilateral with ^COUNTRIES   
     
  [] Unilateral   
     
- The    placeholder    phrase    "#CURRENCY"    should    be    replaced,    for    example,    with    "U.S.    dollars,"    "Euros,"    or    "Japanese    yen."   
     
- The    placeholder    phrase    "#DATE"    should    be    replaced    with    a    date    in    the    format    of    "December    31,    2020."   
     
The    APA    Term    will    be    expressed    as    dates    certain,    e.g.,    "January    1,    2017    to    December    31,    2022,    inclusive",    rather    than    as    particular    tax years.   
     
Taxpayers may need to draft custom text for situations or options not included in the template. For example, a taxpayer may propose additional critical assumptions to address specific regulatory contingencies or conditions the taxpayer is expected to face during the term of the APA. As another example, the provision titled "Limitation on Assistance" at the end of the Recitals might be modified based on an understanding reached in the prefiling stage of the APA process. In some cases, a particular critical assumption might    facilitate    reaching    an    agreement    on    an    APA.    Taxpayers    that    include    custom    text    are    required    to    specifically    provide    justification    for the inclusion in the APA request, just as selecting an option with an asterisk requires justification. Any custom text must also be evident in the "redline" comparison of the proposed draft APA.   
     
 INSTRUCTIONS ON TABLES      
     
The template contains certain tables that the taxpayer should edit. Entries in the tables will not contain hashtags, but taxpayers nevertheless    should    fill    in    the    information    and    add    additional    rows    to    the    tables    if    needed.    Taxpayers    also    should    fill    in    the    "APA    Information" in the table in Appendix D, to the extent available or proposed.   
     
 INSTRUCTIONS ON APPENDIX A      
     
Appendix A of this template contains the description of the APA's covered issue(s) and covered method(s). Taxpayers should note the following points in completing Appendix A:   
     
- The    template    includes    just    one    covered    issue    with    one    corresponding    covered    method.    If    there    is    more    than    one    covered    Issue proposed for the APA, the taxpayer should add additional covered issues in Appendix A, section 3, with  tracked changes.   
     
- If    there    is    more    than    one    covered    method,    the    taxpayer    should    first    replicate    the    template's    entire    text    for    Covered    Method    1 in Appendix A, section 4, without  tracked changes, to provide template text for each additional covered method, and then edit the text for each covered method with  tracked changes.   
     
- Normally,    each    covered    issue    will    have    its    own    corresponding    covered    method.    However,    in    some    cases,    a    covered    method    may apply at once to more than one covered issue. For example, covered issues may be proposed to be aggregated and tested by a single covered method. In such cases, the heading for that covered method could read, for example, "Covered Method for Covered Issues 1-3".   
     
- Any    interaction    between    different    covered    methods    should    be    adequately    explained    in    the    text,    and    in    an    appropriate    manner. For example, an explanation might be provided in an introduction at the start of section 4 of Appendix A, preceding the description of the respective covered methods.   
     
Appendix    A    uses    the    term    "Tested    Party."    When    applied    in    the    context    of    methods    that    consider,    or    test,    data    from    only    one    party    to a transaction, this term is similar in concept to the term "tested party" as discussed in the OECD Guidelines at paragraphs 3.18 and    3.19,    and    as    defined    in    the    U.S.    Treasury    Regulations    section    1.482-5(b)(2).    However,    some    methods    consider,    or    test,    data    from    both    parties    to    a    transaction,    where    there    is    no    singular    "tested"    party.    Even    in    applying    such    methods,    however,    it    is    typically    the    case that one particular party's results are formally tested for compliance with the method. For purposes of this template, in such circumstances, the party whose results are formally tested in applying any particular method is the "Tested Party", even if that party is not strictly a "tested party" as discussed in the OECD Guidelines paragraphs 3.18 and 3.19, or as defined in the U.S. Treasury Regulations section 1.482-5(b)(2).   
     
     
 ADVANCE PRICING AGREEMENT      
     
 between    
 #SIGNATORY    
 and    
 THE INTERNAL REVENUE SERVICE      
     
[] Bilateral with #COUNTRY   
[] Multilateral with #COUNTRIES   
[] Unilateral   
     
Term:    #DATE    to    #DATE,    inclusive   
     
[]    This    APA    is    commonly    referred    to    as    #APA    NAME.   
     
 PARTIES      
     
The    Parties    to    this    APA    are    the    Internal    Revenue    Service    ("IRS")    and    #NAME    OF    EACH    NON-IRS    SIGNATORY,    WITH    EIN.   
     
[] #SIGNATORY    will    be    referred    to    as    "U.S.    Taxpayer."   
     
[] #SIGNATORY  is    the    common    parent    of    an    affiliated    group    filing    consolidated    U.S.    tax    returns    and    is    entering    into    this    APA    on behalf of both itself and the following members of its consolidated group: #MEMBERS OF GROUP.  All members of this consolidated group will be referred to collectively as "U.S. Taxpayer."   
     
 RECITALS      
     
[] This    APA    is    a    renewal    of    one    or    more    prior    APAs,    which    are    listed    below    in    reverse    chronological    order:   
     
           
   
Key:
   
-  Party(ies):   The    signatory(ies)    to    the    prior    APA,    other    than    the    IRS,    with    each    signatory's    taxpayer    identification    number;   
     
-  Execution Date: The date, or the later of the dates, on which the prior APA was executed;   
     
-  Term: The term of the prior APA.   
     
[] This    is    a    bilateral    APA    within    the    meaning    of    Rev.    Proc.    2015-41    and    implements    the    terms    of    a    mutual    agreement    reached    between the United States and #COUNTRY.   
     
[] This    is    a    multilateral    APA    within    the    meaning    of    Rev.    Proc.    2015-41    and    implements    the    terms    of    a    mutual    agreement    reached    among the United States, #COUNTRIES.   
     
[] This    APA    is    a    unilateral    APA    within    the    meaning    of    Rev.    Proc.    2015-41    and    is    not    based    on    any    mutual    agreement.   
     
The    Parties    to    this    APA    are    defined    in    the    "Parties"    section    above.    Regarding    the    Party(ies)    to    this    APA    other    than    the    IRS:   
     
[] No    such    Party    has    an    immediate    parent    or    owner    that    is    not    a    U.S.    entity.   
     
[] One    or    more    such    Parties    has    an    immediate    parent    or    owner    that    is    not    a    U.S.    entity,    as    follows:   
     
           
     
Key:
   
-  Party: Name of the Party having an immediate parent or owner that is not a U.S. entity;
   
-  Parent's or Owner's Identifying Information: Name of the immediate parent or owner of such Party, and the taxpayer identification number of that parent or owner for income tax purposes in its country of residence;
   
-  Parent's or Owner's Contact Information: The immediate parent's or owner's address and phone number.
   
The   term    "Worldwide    Group"    is    defined    below    in    paragraph    12    of    this    APA.    The    ultimate    parent    entity    or    owner    of    Worldwide    Group is:   
     
#ENTITY NAME, ADDRESS, AND PHONE   
     
U.S.    Taxpayer's    principal    place    of    business    is    #CITY,    #STATE.    #BRIEF    DESCRIPTION    OF    U.S.    TAXPAYER    AND    NON-U.S.    TAXPAYER    (DEFINED    IN    SECTION    1    OF    APPENDIX    A),    AND    SPECIFICALLY    OF    EACH    COVERED    ENTITY    (DEFINED    IN SECTION 1 OF APPENDIX A).   
     
This APA contains the Parties' agreement on the Covered Method(s) for resolving the Covered Issue(s) under Code section 482 and any    other    Code    sections    that    are    identified    in    Appendix    A    to    this    APA,    the    U.S.    Treasury    Regulations    thereunder,    and    (if    applicable):   
     
[] The    income    tax    convention(s)    between    the    United    States    and    #COUNTRY(IES).   
     
This APA shall not limit the authority of the IRS to (1) verify compliance with this APA as to the Covered Issue(s), or (2) audit issues other than Covered Issue(s), including issues that arise under Code section 482 and any other Code sections identified in Appendix A to this APA, and the U.S. Treasury Regulations thereunder.   
     
 LIMITATION ON ASSISTANCE      
     
The Covered Issue(s) may relate to one or more countries which (i) have an income tax convention with the United States, but (ii) are not a party to a mutual agreement whose terms are implemented by this APA. U.S. Taxpayer acknowledges that the IRS may decline to provide competent authority assistance concerning taxation by such country(ies) that relates to the Covered Issue(s). See section 2.02(4)(d) of Rev.Proc. 2015-41.   
     
 AGREEMENT      
     
The Parties agree as follows:   
     
1. Covered Entities. This APA's Covered Entities are defined in Appendix A.   
     
2. Covered Issue(s). This APA applies to the Covered Issue(s), as defined in Appendix A.   
     
3. Covered Method(s). Appendix A sets forth the Covered Method(s) for the Covered Issue(s).   
     
4. Term.    This    APA    applies    to    the    APA    Term,    as    defined    in    Appendix    A.   
     
5. Operation.    
     
a. Rev.Proc.    2015-41    governs    the    interpretation,    legal    effect,    and    administration    of    this    APA.   
     
b. The APMA program provides a voluntary process whereby the IRS and taxpayers may resolve transfer pricing issues and issues for which transfer pricing principles may be relevant in a principled and cooperative manner on a prospective basis. As    such,    the    APA    process    (as    defined    in    Rev.    Proc.    2015-41)    is    an    alternative    to    dispute    resolution    that    benefits    both    taxpayers and the IRS and that is intended to promote and encourage open communication. Accordingly, the IRS and U.S. Taxpayer agree that neither party will attempt to use nonfactual oral or written representations, within the meaning of sections 6.04 and 6.05 of IRS Revenue Procedure 2015-41 (including any proposals to use particular Covered Method(s)), made in conjunction with the APA Request in any judicial or administrative proceeding. The IRS and U.S. Taxpayer also agree that factual representations made in conjunction with the APA Request may be used in judicial and administrative proceedings.   
     
6. Compliance.    
     
a. U.S. Taxpayer must report its taxable income in an amount that is consistent with Appendix A and all other requirements of this APA. U.S. Taxpayer must so report its taxable income in the following manner:   
     
i. For    any    APA    Tax    Year    for    which    U.S.    Taxpayer    timely    files    its    original    U.S.    return    prior    to,    or    no    later    than    60    days    after,    the    U.S.    Effective    Date,    U.S.    Taxpayer    must    so    report    its    taxable    income    for    that    APA    Tax    Year    in    one    of    the    following    ways:   
     
A. on such original U.S. return;   
     
B. on an amended U.S. return submitted no later than 120 days after the U.S. Effective Date;   
     
C. through a means proposed by U.S. Taxpayer and accepted by the applicable IRS practice area no later than 120 days after the U.S. Effective Date (or by such other deadline as is agreed between U.S. Taxpayer and the applicable IRS practice area); or   
     
D. if applicable:   
     
[]* no    later    than    120    days    after    the    U.S.    Effective    Date    through    the    following    means:    #DESCRIPTION    OF    MEANS.   
     
ii. For    all    other    APA    Tax    Years,    U.S.    Taxpayer    must    so    report    its    taxable    income    on    its    timely    filed    original    U.S.    return.   
     
iii. The provisions of paragraphs 6(a)(i) and 6(a)(ii) are modified by this paragraph 6(a)(iii). If a Covered Method includes a term test (including the case of an annual test with a supplemental term test) or a subterm test, as described in section 4 of Appendix A, then the APA Covered Year as of which the term test or subterm test applies would change in the event of    an    Early    Termination.    Specifically,    while    in    the    absence    of    an    Early    Termination    a    term    test    would    apply    as    of    the    last    APA Covered Year, in the event of an Early Termination the term test would apply as of an earlier APA Covered Year. Similarly, while in the absence of an Early Termination a subterm test would apply as of the last APA Covered Year in the subterm, in the event of an Early Termination the subterm test might apply as of an earlier APA Covered Year. In these situations, the Early Termination might not be established in time for U.S. Taxpayer to know to apply the term test or subterm test as of the earlier APA Covered Year in reporting taxable income as required under paragraphs 6(a)(i) and 6(a)(ii) for the APA Tax Year corresponding to that earlier APA Covered Year. In such cases, U.S. Taxpayer may need to correct    its    reporting    for    that    APA    Tax    Year.    Specifically,    U.S.    Taxpayer    will    need    to    correct    its    income    reporting    for    that    APA Tax Year if the application of the term test or subterm test in that earlier APA Covered Year changes the existence or amount of an APA Primary Adjustment for the Covered Method for that APA Tax Year. In such cases:   
     
A) The resulting incorrectness in the prior reporting for that APA Tax Year is excused; and   
     
B) U.S. Taxpayer must correct such prior reporting through a means listed in paragraph 6(a)(i) within 120 days of the Early Termination being established.   
     
b. For each Covered Issue, if any, that involves determination of pricing and/or income allocation  16  under Code section 482    (or    Code    section    367(d))    as    modified    by    any    applicable    income    tax    convention,    this    APA    addresses    the    pricing    and/or income allocation between U.S. Taxpayer and Non-U.S. Taxpayer in the aggregate. Except as explicitly provided, this APA does not address and does not bind the IRS with respect to pricing or income allocation (1) among particular legal entities that are members of U.S. Taxpayer, or (2) among particular legal entities that are members of Non-U.S. Taxpayer. In addition, this APA does not address pricing or income allocation between an entity that is not a Covered Entity, and any entity.   
     
********   
16    As used in this APA, "income allocation" includes allocation of loss.     
********   
     
c. For each APA Tax Year, if U.S. Taxpayer complies with the terms and conditions of this APA, then, provided that this APA    remains    effective    for    that    APA    Tax    Year    for    a    particular    Covered    Issue,    the    IRS    will    not    make    or    propose    any    allocation or adjustment that is inconsistent with the application under this APA of the applicable Covered Method to that Covered Issue.   
     
d. If U.S. Taxpayer does not comply with the terms and conditions of this APA, then the IRS may:   
     
i. enforce the terms and conditions of this APA and make or propose allocations or adjustments based on the application of the Covered Method(s) to the Covered Issue(s) as provided in this APA;   
     
ii. cancel or revoke this APA under section 7.06 of Rev. Proc. 2015-41; or   
     
iii. revise this APA, if the Parties agree.   
     
e. U.S.    Taxpayer    must    timely    file    an    Annual    Report    for    each    APA    Tax    Year    in    accordance    with    this    paragraph    6(e),    Appendix C to this APA, and section 7.02 of Rev. Proc. 2015-41. Annual Reports for multiple APA Tax Years may be combined, provided that all required information for each APA Tax Year is clearly presented. For each Annual Report, U.S. Taxpayer must submit an original printed version containing a signed original "penalties of perjury" declaration, one printed copy of the contents of the original printed version, and an electronic copy of the contents of the original printed version. Any exhibits in the printed version must be tabbed, and the electronic copy is subject to the same requirements,    as    to    medium    and    format,    that    are    specified    for    APA    requests    in    section    2    of    the    Appendix    to    Rev.    Proc.    2015-41. Upon request, U.S. Taxpayer must provide additional copies of the printed version, at addresses specified by the    IRS.    U.S.    Taxpayer    must    file    the    Annual    Report    for    each    APA    Tax    Year    by    the    later    of    (i)    #DATE    CERTAIN,    NORMALLY    APPROXIMATELY    90    DAYS    AFTER    THE    U.S.    EFFECTIVE    DATE,    and    (ii)    the    fifteenth    day    of    the    twelfth    month following the close of the APA Tax Year. The IRS may by notice request additional information reasonably necessary to clarify or complete the Annual Report. (See paragraph 16, and section 3(c) of Appendix C, regarding notices.) U.S. Taxpayer will provide such requested information within 30 days from the date of the notice unless a later date is specified in the notice. Additional time may be allowed for good cause in the discretion of the Director of the Advance Pricing and Mutual Agreement Program.   
     
f. The IRS will determine whether U.S. Taxpayer has complied with this APA based on U.S. Taxpayer's U.S. returns, the Financial Statements and additional statements required under this paragraph 6(f), and other APA Records, for all APA Tax Years and any other tax year necessary to verify compliance. The Financial Statements and additional statements required for a particular tax year are:   
     
[] For    every    U.S.    Covered    Entity,    the    Financial    Statements    together    with    the    additional    statements    specified    in    paragraph 6(f)(i); and for every Non-U.S. Covered Entity, the Financial Statements together with the additional statements specified in paragraph 6(f)(ii).   
     
[]* For    every    U.S.    Covered    Entity,    the    Financial    Statements    together    with    the    additional    statements    specified    in    paragraph 6(f)(i).   
     
[]* For    every    Non-U.S.    Covered    Entity,    the    Financial    Statements    together    with    the    additional    statements    specified    in    paragraph 6(f)(ii).   
     
i. For each U.S. Covered Entity, the additional statements consist of the following statement(s):   
     
[] An    audit    opinion    for    that    U.S.    Covered    Entity's    Financial    Statements,    as    defined    in    paragraph    6(f)(iii).   
     
[]* One or more of the following, as indicated:   
     
[] An    accountant's    report    for    that    U.S.    Covered    Entity's    Financial    Statements,    as    defined    in    paragraph    6(f)(iii).   
     
[] A    self-certification    for    that    U.S.    Covered    Entity's    Financial    Statements,    as    defined    in    paragraph    6(f)(iii).   
     
[] A    self-certification    for    that    U.S.    Covered    Entity's    Financial    Statements,    together    with    a    tying    certification    for    that entity's Financial Statements, as defined in paragraph 6(f)(iii).   
     
[] #OTHER MEANS OF VERIFYING THE RELIABILITY OF THE U.S. COVERED ENTITY'S FINANCIAL STATEMENTS.   
     
ii. For each Non-U.S. Covered Entity, the additional statements consist of the following statement(s):   
     
[] An    audit    opinion    for    that    Non-U.S.    Covered    Entity's    Financial    Statements,    as    defined    in    paragraph    6(f)(iii).   
     
[]* One or more of the following, as indicated:   
     
[] An    accountant's    report    for    that    Non-U.S.    Covered    Entity's    Financial    Statements,    as    defined    in    paragraph    6(f)(iii).   
     
[] A    self-certification    for    that    Non-U.S.    Covered    Entity's    Financial    Statements,    as    defined    in    paragraph    6(f)(iii).   
     
[] A    self-certification    for    that    Non-U.S.    Covered    Entity's    Financial    Statements,    together    with    a    tying    certification    for that Covered Entity's Financial Statements, as defined in paragraph 6(f)(iii).   
     
[] #OTHER MEANS OF VERIFYING THE RELIABILITY OF THE NON-U.S. COVERED ENTITY'S FINANCIAL STATEMENTS.   
     
iii. With reference to the Financial Statements for a particular Covered Entity for a particular tax year, certain terms used in paragraphs 6(f)(i) and 6(f)(ii) are defined as follows:   
     
A. An audit opinion is an opinion of an independent certified public or chartered accountant who audited the Financial Statements.   
     
B. An    accountant's    report    is    a    report    of    an    independent    certified    public    or    chartered    accountant    who    is    associated    with    the Financial Statements.   
     
C. A    self-certification    is    an    attestation,    as    defined    in    paragraph    6(f)(iii)(E),    that    the    Financial    Statements    have    been    prepared according to the Applicable Accounting Standard.   
     
D. A tying certification consists of the following:   
     
(1) An attestation, as defined in paragraph 6(f)(iii)(E), that the Financial Statements can be reconciled to the consolidated Financial Statements for that entity's direct or indirect parent according to workpapers provided with the attestation;   
     
(2) The workpapers referred to in paragraph 6(f)(iii)(D)(1), which must demonstrate the consolidation of the Covered Entity's Financial Statements into the Financial Statements of the parent referred to in paragraph 6(f)(iii)(D)(1);   
     
(3) The Financial Statements of the parent referred to in paragraph 6(f)(iii)(D)(1); and   
     
(4) An audit opinion (as defined in paragraph 6(f)(iii)(A)) for the Financial Statements of the parent referred to in paragraph 6(f)(iii)(D)(1).   
     
E. An attestation is an affirmation by an officer of the Covered Entity in the following form:   
     
I, [Officer's Name and Title], of [Name of Covered Entity]  affirm under penalties of perjury that the facts stated below are true. I either have adequate first-hand knowledge to make this affirmation or have gained adequate knowledge to make this affirmation through diligent consultation(s) with one or more individuals who have first-hand knowledge.   
     
[Facts attested to.]   
     
[Signature]   
     
g. In accordance with section 7.04 of Rev. Proc. 2015-41, U.S. Taxpayer will (1) maintain the APA Records, and (2) make them available to the IRS in connection with an examination under section 7.03 of Rev. Proc. 2015-41. Compliance with this subparagraph constitutes compliance with the record-maintenance provisions of Code sections 6038A and 6038C for the Covered Issue(s) for any APA Covered Year.   
     
h. The    "true    taxable    income"    within    the    meaning    of    U.S.    Treasury    Regulations    sections    1.482-1(a)(1)    and    (i)(9)    of    a    member    of an affiliated group filing a U.S. consolidated return will be determined under the U.S. Treasury Regulations under Code section 1502.   
     
i. To the extent that U.S. Taxpayer's compliance with this APA depends on certain acts of other members of Worldwide Group, U.S. Taxpayer will ensure that such other members will perform such acts.   
     
7. Critical Assumptions.     The    Critical    Assumptions,    which    are    this    APA's    critical    assumptions    as    defined    in    Rev.    Proc.    2015-41,    appear in Appendix B. If any Critical Assumption has not been met, then Rev. Proc. 2015-41, section 7.06, governs, as modified by Appendix B to this APA.   
     
8. Disclosure.     This    APA,    and    any    background    information    related    to    this    APA    or    the    APA    Request,    are:    (1)    considered    "return    information" under Code section 6103(b)(2)(C); and (2) not subject to public inspection as a "written determination" under Code section 6110(b)(1). Section 521(b) of Pub. L. 106-170 provides that the Secretary of the Treasury must prepare a report for public disclosure    that    includes    certain    specifically    designated    information    concerning    all    APAs,    including    this    APA,    in    a    form    that    does    not reveal taxpayers' identities, trade secrets, and proprietary or confidential business or financial information.   
     
9. Disputes.  If a dispute arises concerning the interpretation or application of this APA, the Parties will seek a resolution by the Director, Treaty and Transfer Pricing Operations, to the extent reasonably practicable, before seeking alternative remedies.   
     
10. Materiality.     In    this    APA    the    terms    "material"    and    "materially"    will    be    interpreted    in    a    manner    consistent    with    the    description    of    "material facts" in Rev. Proc. 2015-41, section 7.06(4).   
     
11. Paragraph Captions.  This APA's paragraph captions, which appear in italic type, are for convenience and reference only. The captions do not affect in any way the interpretation or application of this APA.   
     
12. Terms and Definitions.   
     
a. Unless otherwise specified, terms in the plural include the singular and vice versa.   
     
b. Appendix    A    contains    definitions    for    certain    terms    used    in    this    APA's    body    and    appendices.   
     
c. Certain    terms    used    in    this    APA's    body    and    appendices    are    defined    as    follows:   
     
           
     
13. Deadline References.  If a deadline under this APA falls on a Saturday, Sunday, or a legal holiday in the District of Columbia, the deadline is extended to the next succeeding day that is not a Saturday, Sunday, or legal holiday in the District of Columbia.
   
14. Entire Agreement and Severability.  This APA is the complete statement of the Parties' agreement. The Parties will sever, delete, or reform any invalid or unenforceable provision in this APA to approximate the Parties' intent as nearly as possible.
   
15. Successor in Interest.    This    APA    binds,    and    inures    to    the    benefit    of,    any    successor    in    interest    to    U.S.    Taxpayer.   
     
16. Notice.  Any notices required by this APA or Rev. Proc. 2015-41 must be in writing. U.S. Taxpayer will send notices to the IRS at:   
     
Commissioner, Large Business and International Division   
Internal Revenue Service   
1111 Constitution Avenue, NW   
SE:LB:TTPO:APMA:NCA534-01   
Washington, DC 20224   
(Attention: APMA)   
     
The IRS will send notices to:   
     
#NAME AND ADDRESS   
(phone: #PHONE)   
     
The IRS also will send notices to, if applicable:   
     
[]    #REPRESENTATIVE'S    NAME    AND    ADDRESS   
(phone: #PHONE)   
     
provided that a valid IRS Form 2848 "Power of Attorney and Declaration of Representative" for that person was included in the most    recent    Annual    Report    (or,    if    no    Annual    Report    has    been    filed,    was    included    in    the    APA    Request).   
     
17. U.S. Effective Date and Counterparts.  This APA is effective starting on the date, or later date of the dates, upon which all Parties execute    this    APA    ("U.S.    Effective    Date").    The    Parties    may    execute    this    APA    in    counterparts,    with    each    counterpart    constituting    an original.   
     
  WITNESS,       
     
The Parties have executed this APA on the dates below.   
     
 #SIGNATORY NAME IN BOLD FACE BLOCK CAPITAL LETTERS      
     
By: __________________________Date: _________________, 20____   
#NAME   
#TITLE   
     
 INTERNAL REVENUE SERVICE      
     
By: __________________________Date: _________________, 20____   
John M. Wall   
Acting Director, Advance Pricing and Mutual Agreement Program   
     
     
 APPENDIX A    
 COVERED ENTITIES, TERM, COVERED ISSUE(S), COVERED METHOD(S),    
 INCOME REPORTING,CONFORMING ADJUSTMENTS AND    
 REPATRITION OF FUNDS,CERTAIN SUBSEQUENT    
 ADJUSTMENTS,AND DEFINITIONS      
     
Section    1    of    this    Appendix    lists    the    Covered    Entities.    Section    2    defines    the    APA    Term,    APA    Tax    Years,    and    APA    Covered    Years.    Section 3 describes the Covered Issue(s). Section 4 describes the Covered Method applicable to each Covered Issue.   
     
Section 5 describes the application of the Covered Method(s) to income reporting and the possible need for an APA Primary Adjustment under one or more Covered Methods. Section 6 addresses conforming adjustments and repatriation of funds following APA Primary Adjustments.   
     
Section 7 provides definitions that apply both to this Appendix and to the APA as a whole. The definitions table is based on a standard, inclusive model, and thus may include terms not used in this APA.   
     
 1. Covered Entities      
     
  The U.S. Covered Entity(ies) are:   
     
#LIST    OF    EACH    U.S.    ENTITY    INVOLVED    IN    ONE    OR    MORE    COVERED    ISSUE(S),    AND    ALSO    (LISTED    FIRST)    ANY CONSOLIDATED RETURN PARENT FOR ANY SUCH ENTITY. FOR EACH ENTITY, NAME, ADDRESS, PHONE, AND EIN.   
     
The    term    "U.S.    Taxpayer"    includes    collectively    all    U.S.    Covered    Entities    and    any    other    entities    that    are    in    a    consolidated    return    group with a U.S. Covered Entity.   
     
  The Non-U.S. Covered Entity(ies) are:   
     
#    LIST    OF    EACH    NON-U.S.    ENTITY    INVOLVED    IN    ONE    OR    MORE    COVERED    ISSUE(S),    AND    ALSO    (LISTED    FIRST)    ANY    COMMON    TAX    REPORTING    PARENT    FOR    ANY    SUCH    ENTITY.    FOR    EACH    ENTITY,    NAME,    ADDRESS, AND PHONE.   
     
The term "Non-U.S. Taxpayer" includes collectively all Non-U.S. Covered Entities and any other entities that are in a common tax reporting group with a Non-U.S. Covered Entity.   
     
The term "Covered Entities" includes both the U.S. Covered Entities and the Non-U.S. Covered Entities.   
     
 2. APA Term, APA Tax Years, and APA Covered Years      
     
  The    APA    applies    to    the    period    from    #DATE    to    #DATE,    inclusive    (the    "APA    Term").   
     
[] The    APA    Term    does    not    include    a    Rollback.   
     
[] The    APA    Term    includes    a    Rollback,    which    covers    from    #DATE    to    #DATE,    inclusive    (the    "Rollback    Period").   
     
A    tax    year    of    U.S.    Taxpayer    that    is    wholly    or    partly    contained    in    the    APA    Term    is    called    an    "APA    Tax    Year."    For    a    particular    APA    Tax    Year,    the    portion    of    such    APA    Tax    Year    that    is    contained    in    the    APA    Term    is    called    an    "APA    Covered    Year."    Such    APA    Tax    Year    and    APA    Covered    Year    are    said    to    "correspond"    to    each    other    or    to    be    "corresponding."   
     
 3. Covered Issue(s)      
     
The Covered Issue(s) are as described below.   
     
  Covered Issue 1:      
     
#DESCRIPTION OF COVERED ISSUE.   
     
 4. Covered Method(s)      
     
Each Covered Method applies to one or more Covered Issues. A Covered Method and the Covered Issue(s) to which the Covered Method applies are said to "correspond," or to be "corresponding".   
     
The Covered Methods are summarized in the following table and are described in detail below. In case of conflict with this table, the detailed descriptions of the Covered Methods below, and the descriptions in section 3 above of the Covered Issues, control.   
     
           
   
This   Appendix    A    uses    the    term    "Tested    Party."    When    applied    in    the    context    of    methods    that    consider,    or    test,    data    from    only    one    party to a transaction, this term is similar in concept to the term "tested party" as discussed in the OECD Guidelines paragraphs 3.18 and    3.19,    and    as    defined    in    the    U.S.    Treasury    Regulations    section    1.482-5(b)(2).    However,    some    methods    consider,    or    test,    data    from    both    parties    to    a    transaction,    where    there    is    no    singular    "tested"    party.    Even    in    applying    such    methods,    however,    it    is    typically    the    case that one particular party's results are formally tested for compliance with the method. For purposes of this template, in such circumstances, the party whose results are formally tested in applying any particular method is the "Tested Party", even if that party is not strictly a "tested party" as discussed in the OECD Guidelines paragraphs 3.18 and 3.19, or as defined in the U.S. Treasury Regulations section 1.482-5(b)(2).   
     
  Covered Method for Covered Issue 1:      
     
 a. Tested Party      
     
The    Tested    Party    is    #TESTED    PARTY.   
     
 b. Financial Results Tested (Type of Method)      
     
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and of    the    comparable    uncontrolled    price    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested are:   
     
[] per unit price paid, defined as the total amount paid for #DESCRIPTION OF GOODS divided by the number of #DESCRIPTION OF A UNIT OF GOODS purchased.   
     
[] per unit price received, defined as the total amount received for #DESCRIPTION OF GOODS divided by the number of #DESCRIPTION OF A UNIT OF GOODS sold.   
     
[] The    Covered    Method    is    an    implementation    of    the    comparable    uncontrolled    price    method    under    the    OECD    Guidelines    and    of    the    comparable    uncontrolled    services    price    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to be tested are:   
     
[] per    unit    price    paid,    defined    as    the    total    amount    paid    for    #DESCRIPTION    OF    SERVICES    divided    by    the    number    of    #DESCRIPTION OF A UNIT OF SERVICES received.   
     
[] per    unit    price    received,    defined    as    the    total    amount    received    for    #DESCRIPTION    OF    SERVICES    divided    by    the    number    of #DESCRIPTION OF A UNIT OF SERVICES provided.   
     
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and of    the    comparable    uncontrolled    transaction    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    the    royalty    paid    for    the    license    of    #DESCRIPTION    OF    LICENSED    INTANGIBLE    PROPERTY    divided    by    the Tested Party's:   
     
[] sales    revenue    from    sales    of    #DESCRIPTION    OF    GOODS/SERVICES.   
     
[] #OTHER    ROYALTY    BASE.   
     
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and of    the    acquisition    price    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    described in subsection (c) below.   
     
[] The Covered Method is an implementation of the comparable uncontrolled price method under the OECD Guidelines and of    the    market    capitalization    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    described in subsection (c) below.   
     
[] The Covered Method is an implementation of the resale price method under the OECD Guidelines and of the resale price method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    the    gross    profit    margin    from    the sale of #DESCRIPTION OF GOODS.   
     
[] The Covered Method is an implementation of the resale price method under the OECD Guidelines and of the gross services margin    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    the    gross    services    margin    from    the    provision    of    #DESCRIPTION    OF    SERVICES.   
     
[] The Covered Method is an implementation of the cost plus method under the OECD Guidelines and of the cost plus method under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    the    gross    profit    markup.   
     
[] The Covered Method is an implementation of the cost plus method under the OECD Guidelines and of the cost of services plus    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    the    gross    services    profit markup from the provision of #DESCRIPTION OF SERVICES.   
     
[] The Covered Method is based on the principles of the low value-adding intra-group services approach under the OECD Guidelines    and    of    the    services    cost    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested are the markup on total costs for providing #DESCRIPTION OF SERVICES.   
     
[] The    Covered    Method    is    an    implementation    of    the    transactional    net    margin    method    under    the    OECD    Guidelines    and    of    the    comparable    profits    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested,    as    reflected    in its net profit indicator (per OECD Guidelines) or profit level indicator (per U.S. Treasury Regulations), are its:   
     
[] operating    margin.   
     
[] markup on total costs.   
     
[] Berry ratio.   
     
[] return on operating assets.   
     
[] return on invested capital.   
     
[]* #OTHER    NET    PROFIT    INDICATOR    OR    PROFIT    LEVEL    INDICATOR,    WITH    DEFINITION.   
     
[] The Covered Method is an implementation of the profit split (residual analysis) method under the OECD Guidelines and of    the    residual    profit    split    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    described in subsection (c) below.   
     
[] The Covered Method is an implementation of the profit split (contribution analysis) method under the OECD Guidelines and of    the    comparable    profit    split    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are described in subsection (c) below.   
     
[] The Covered Method is an implementation of an income based valuation technique as referenced in paragraph 6.153 of the OECD    Guidelines    and    of    the    income    method    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested are described in subsection (c) below.   
     
[] The Covered Method is an implementation of (i) a sharing of the cost of current contributions in proportion to overall expected benefits, within a cost contribution arrangement under the OECD Guidelines, and (ii) a sharing of intangible development costs in proportion to reasonably anticipated benefits, within a cost sharing arrangement under the U.S. Treasury Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    described    in    subsection    (c)    below.   
     
[] The    Covered    Method    is    a    method    that    is    not    specified    under    the    OECD    Guidelines    and    not    specified    under    the    U.S.    Treasury    Regulations.    The    Tested    Party's    financial    results    to    be    tested    are    described    in    subsection    (c)    below.   
     
Such financial results are determined according to the Applicable Accounting Standard, with the proviso that in determining such results, accounting principles and conventions that are generally accepted in the trade or industry must be used.   
     
Such    financial    results    are    tested    against    a    point    or    range    as    described    below.    The    test    is    carried    out    with    a    frequency,    and    for    certain    time    periods,    as    described    below.    If    and    when    these    financial    results    do    not    satisfy    the    test,    they    must    be    adjusted    as    described    in    section 5 of this Appendix A.   
     
 c. Testing of Financial Results Against a Point or Range      
     
The    Tested    Party's    financial    results    are    tested    as    follows:   
     
[] The financial results must equal #X.   
     
[] The    financial    results    must    be    within    an    Arm's    Length    Range.   
     
[] The    Arm's    Length    Range    is    from    #X    to    #Y    inclusive.   
     
[] This    Arm's    Length    Range    has    an    associated    Median    value    of    #Z.   
     
[] This    Arm's    Length    Range    has    no    associated    Median    value.   
     
[] Two    Arm's    Length    Ranges    apply.    The    first    is    from    #W    to    #X    inclusive    and    applies    to    the    annual    test    described    in    subsection    (d)    below.    The    second    is    from    #Y    to    #Z    inclusive    and    applies    to    the    term    test    described    in    subsection    (d)    below.   
     
[] The    first    Arm's    Length    Range    has    an    associated    Median    value    of    #P,    and    the    second    Arm's    Length    Range    has    an    associated Median value of #Q.   
     
[] These    Arm's    Length    Ranges    have    no    associated    Median    value.   
     
[] Two    Arm's    Length    Ranges    apply.    The    first    is    from    #W    to    #X    inclusive    and    applies    to    the    subterm    test    described    in    subsection (d) below. The second is from #Y to #Z inclusive and applies to the annual test described in subsection (d) below.   
     
[] The    first    Arm's    Length    Range    has    an    associated    Median    value    of    #P,    and    the    second    Arm's    Length    Range    has    an    associated Median value of #Q.   
     
[] These    Arm's    Length    Ranges    have    no    associated    Median    value.   
     
[] Two    Arm's    Length    Ranges    apply.    The    first    is    from    #W    to    #X    inclusive    and    applies    to    the    test    for    the    first    subterm    described in subsection (d) below. The second is from #Y to #Z inclusive and applies to the test for the second subterm described in subsection (d) below.   
     
[] The    first    Arm's    Length    Range    has    an    associated    Median    value    of    #P,    and    the    second    Arm's    Length    Range    has    an    associated Median value of #Q.   
     
[] These    Arm's    Length    Ranges    have    no    associated    Median    value.   
     
[] #OTHER    DESCRIPTION,    FOR    EXAMPLE    THE    EVALUATION    AND    TESTING    MECHANICS    FOR    A    PROFIT    SPLIT,    AN INCOME METHOD, AN UNSPECIFIED METHOD, OR A SHARING OF COSTS UNDER A COST CONTRIBUTION ARRANGMENT/COST SHARING ARRANGEMENT.   
     
 d. Testing Frequency and Testing Periods      
     
The    Tested    Party's    financial    results    are    tested    as    of    certain    APA    Covered    Years,    and    for    certain    time    periods,    as    follows:   
     
[] The    results    are    tested    annually,    meaning    that    they    are    tested    as    of    each    APA    Covered    Year,    for    a    period    consisting    of    that    APA    Covered Year.   
     
[] There is no additional term test.   
     
[] There    is    an    additional    term    test.    For    this    test,    the    results    are    tested    as    of    the    Last    Effective    APA    Covered    Year,    for    the    period    consisting    of    the    Last    Effective    APA    Covered    Year    and    all    prior    APA    Covered    Years.   
     
The application of the annual test and the application of the additional term test are coordinated as described in section 5 of this Appendix A.   
     
[]* The    results    are    tested    on    a    term    basis,    meaning    that    they    are    tested    only    once,    as    of    the    Last    Effective    APA    Covered    Year,    for    a    period    consisting    of    the    Last    Effective    APA    Covered    Year    and    all    prior    APA    Covered    Years.   
     
[]* The    results    are    tested    on    the    basis    of    two    subterms.    For    this    purpose,    the    APA    Term    is    divided    into    two    subterms.    The    first    subterm    consists    of    all    APA    Covered    Years    ending    on    or    before    #DATE,    and    the    second    subterm    consists    of    all    other    APA    Covered    Years.    For    each    subterm,    the    results    are    tested    as    of    the    Last    Effective    APA    Subterm    Covered    Year,    for    a    period    consisting    of    the    Last    Effective    APA    Subterm    Covered    Year    and    all    prior    APA    Covered    Years    in    the    subterm.   
     
[]* The    results    are    tested    on    a    subterm    basis    for    all    APA    Covered    Years    ending    on    or    before    #DATE    (the    "subterm"),    and    are    tested annually for each other APA Covered Year, as follows:   
     
The    results    are    tested    as    of    the    Last    Effective    APA    Subterm    Covered    Year,    for    a    period    consisting    of    the    Last    Effective    APA    Subterm Covered Year and all prior APA Covered Years in the subterm.   
     
The results are tested as of each APA Covered Year that is not in the subterm, for a period consisting of that APA Covered Year.   
     
[]* The results are tested on a cumulative basis, meaning that (except as provided in the following sentence) they are not tested as    of    the    first    APA    Covered    Year    but    they    are    tested    as    of    each    other    particular    APA    Covered    Year    for    a    period    consisting    of    such    particular    APA    Covered    Year    and    all    prior    APA    Covered    Years.    However,    if    the    Last    Effective    APA    Covered    Year    is    the    first    APA    Covered    Year,    then    the    results    are    tested    as    of    the    first    APA    Covered    Year,    for    a    period    consisting    of    such    APA    Covered Year.   
     
[]* The    results    are    tested    on    a    three-year    rolling    average    basis,    meaning    that    the    results    are    tested    as    of    each    APA    Covered    Year,    for a period consisting of the APA Tax Year corresponding to the APA Covered Year (but excluding any portion of that APA Tax Year that is after the APA Term), and the Tested Party's two preceding tax years.   
     
 e. Other Provisions      
     
The    Tested    Party's    financial    results,    to    be    tested    as    described    above,    are    for:   
     
[] The    Tested    Party    as    a    whole.   
     
[] Only    a    segment    of    the    Tested    Party's    activity.    #DETAILED    DESCRIPTION    OF    THE    SEGMENT    AND    OF    THE    ALLOCATION AND APPORTIONMENT METHODS USED, INCLUDING ANY APPLICABLE FORMULAS AND DEFINITIONS OF QUANTITIES USED IN THOSE FORMULAS. THIS DESCRIPTION SHOULD BE DETAILED ENOUGH    TO    ENABLE    A    STRAIGHTFORWARD    VERIFICATION    OF    COMPLIANCE    BY    THE    IRS    EXAMINATION    TEAM.   
     
When    the    Tested    Party's    financial    results    are    tested    as    of    a    given    APA    Covered    Year,    those    results    shall    reflect,    to    the    extent    relevant, any APA Primary Adjustment for this Covered Method made under section 5 of this Appendix A for the APA Tax Year corresponding to any prior APA Covered Year.   
     
For this Covered Method, if applicable:   
     
[]* For    APA    Covered    Years    ending    on    or    before    #DATE,    it    is    agreed    that    this    Covered    Method,    yields    financial    results    as    shown    below, and that any APA Primary Adjustments under section 5 of this Appendix A are as shown below.   
     
#TEXT    AND/OR    TABLES    SHOWING    THE    FINANCIAL    RESULTS,    THE    TESTING    OF    THOSE    FINANCIAL    RESULTS    UNDER THE COVERED METHOD, AND ANY RESULTING APA PRIMARY ADJUSTMENTS.   
     
For this Covered Method, if applicable:   
     
[] This Covered Method addresses the pricing for a transfer of intangible property (which does not constitute a platform contribution    transaction    as    defined    in    U.S.    Treasury    Regulations    section    1.482-7(b)(1)(ii))    within    the    meaning    of    U.S.    Treasury    Regulations section 1.482-4. That pricing will not be subject to periodic adjustments by the IRS, during or after the APA Term, under U.S. Treasury Regulations section 1.482-4(f)(2) or (6).   
     
[] This Covered Method addresses the pricing for a platform contribution transaction ("PCT"). That PCT will not be treated as a Trigger PCT within the meaning of U.S. Treasury Regulations section 1.482-7(i)(6)(i) for purposes of making periodic adjustments, during or after the APA Term, under U.S. Treasury Regulations section 1.482-7(i)(6).   
     
 5. Application of Covered Method(s) to Income Reporting      
     
For each APA Tax Year, and for each Covered Method and corresponding Covered Issue(s), the amounts reported by U.S. Taxpayer    and    Non-U.S.    Taxpayer    for    income    tax    purposes    under    the    laws    of    the    United    States    and    #COUNTRY(IES)    must    clearly    reflect    the    Tested    Party's    actual    transactions,    allocations,    and/or    recordkeeping,    as    applicable,    that    relate    to    such    Covered    Issue(s), adjusted as necessary to conform with section 4 of this Appendix A. Accordingly, for each particular APA Tax Year and corresponding APA Covered Year, and for each such Covered Method:   
     
i. If    the    Tested    Party's    financial    results    are    tested    as    of    such    APA    Covered    Year    and    do    not    conform    with    section    4    of    this    Appendix    A,    then    the    tax    reporting    for    such    APA    Tax    Year    must    clearly    reflect    an    adjustment    that    brings    such    results    into    conformance    (an    "APA    Primary    Adjustment").    If    section    4    of    this    Appendix    A    specifies    conformance    to    an    Arm's    Length    Range, then the adjustment shall be to:   
     
[] the Median.   
     
[]* the    near    edge    of    the    Arm's    Length    Range.   
     
[]* the    Median    for    Covered    Issues    #SPECIFY    WHICH    ONES,    and    the    near    edge    of    the    Arm's    Length    Range    for    Covered    Issues #SPECIFY WHICH ONES.   
     
ii. If    an    adjustment    is    not    required    under    paragraph    (i)    above,    then    the    tax    reporting    must    clearly    reflect    the    Tested    Party's    financial results, with no adjustment. In this case there is no APA Primary Adjustment.   
     
iii. If both an annual test and an additional term test apply under such Covered Method, and such APA Covered Year is the Last Effective    APA    Covered    Year,    so    that    as    of    such    APA    Covered    Year    the    Tested    Party's    financial    results    are    tested    under    both    the annual test and the term test, then paragraphs (i) and (ii) above are modified by this paragraph (iii), which coordinates the application of both tests. As explained in more detail below, the annual test is applied first, followed by the term test. Specifically,    the    need    for    and    amount    of    any    APA    Primary    Adjustment    for    such    APA    Covered    Year    will    be    determined    as    follows:   
     
A. First apply paragraphs (i) and (ii) above under the assumption that only the annual test applies. Any required adjustment will be referred to as the "annual adjustment" rather than an "APA Primary Adjustment." If there is no required adjustment, the annual adjustment is considered to be zero.   
     
B. Next,    apply    paragraphs    (i)    and    (ii)    above    to    the    Tested    Party's    financial    results    as    adjusted    by    any    nonzero    annual    adjustment, under the assumption that only the term test applies to those results. Any required adjustment under this application of paragraphs (i) and (ii) will be referred to as the "term adjustment" rather than an "APA Primary Adjustment." If there is no such required adjustment, the term adjustment is considered to be zero.   
     
C. Add the annual adjustment and term adjustment, taking account of the magnitude and (if nonzero) direction of each. If this sum is zero, there is no APA Primary Adjustment for such APA Covered Year. If this sum is nonzero, this sum gives the magnitude and direction of the APA Primary Adjustment for such APA Covered Year. Any APA Primary Adjustment, or    the    lack    of    an    APA    Primary    Adjustment,    must    be    clearly    reflected    in    the    tax    reporting    for    such    APA    Tax    Year    (see    paragraphs (i) and (ii) above).   
     
iv.    If this APA is unilateral and such APA Covered Year is within the Rollback Period, then:   
     
[] Paragraphs    (i)-(iii)    above    notwithstanding,    an    APA    Primary    Adjustment    will    not    be    made    if    that    APA    Primary    Adjustment would decrease the income of U.S. Taxpayer for such APA Tax Year.   
     
[]* Paragraphs (i)-(iii) above apply without modification.   
     
If indicated, the above provisions on APA Primary Adjustments are modified as follows:   
     
[]* Any    APA    Primary    Adjustment    that    would    be    made    under    the    above    provisions    for    an    APA    Tax    Year    ending    before    #DATE    will    instead    be    made    for    the    APA    Tax    Year    ending    #THE    SAME    DATE    (the    "Telescoping    Year").    For    each    particular    Covered Method, all APA Primary Adjustments that are made for the Telescoping Year (including any APA Primary Adjustments that are moved to the Telescoping Year as just described, as well as any APA Primary Adjustment originally made for the Telescoping Year) are netted.   
     
[] The foregoing provision applies without modification.   
     
[] The    foregoing    provision    applies    with    the    following    modification.    An    APA    Primary    Adjustment    that    is    thus    moved    from    a    particular    APA    Tax    Year    (the    "Original    Year")    to    the    Telescoping    Year    shall    be    increased    in    amount    to    reflect    the    time    value of money. That increase will consist of multiplication by a factor that is an annual rate raised to a power. The annual    rate    is    1.#XY.    The    power    is    the    quotient    of    (i)    the    average    of    the    number    of    months    by    which    the    end    of    the    Telescoping Year is later than the end of the Original Year, and the number of months by which the start of the Telescoping Year is later than the start of the Original Year (with any fractions of months rounded to whole months), (ii) divided by twelve.   
     
For U.S. tax purposes, the generally applicable Code rules will apply with respect to APA Primary Adjustments, except as otherwise provided in Rev. Proc. 2015-41 or in this APA.   
     
 6. Conforming Adjustments and Repatriation of Funds      
     
The provisions in this section 6 apply to "Repatriable Issues," which are Covered Issues that concern transactions between associated enterprises that fall under Article 9 of the OECD Model Tax Convention. Such transactions correspond to transactions that under U.S. law are subject to application of Code section 482, as modified by any applicable treaty provision.   
     
If the application of a Covered Method to a Repatriable Issue requires an APA Primary Adjustment under section 5 of this Appendix A for a given APA Tax Year, then for U.S. tax purposes there generally must be a corresponding conforming adjustment as specified    in    U.S.    Treasury    Regulations    section    1.482-1(g)(3)    as    amplified    by    Rev.    Proc.    99-32    or    any    successor    revenue    procedure. However, for this purpose, all APA Primary Adjustments for such APA Tax Year arising from the application of a Covered Method    to    a    Repatriable    Issue    are    first    netted    to    yield    a    net    APA    Primary    Adjustment    for    such    APA    Tax    Year.    Only    if    the    net    APA    Primary Adjustment is nonzero is a conforming adjustment required.   
     
For each APA Tax Year with a nonzero net APA Primary Adjustment, for U.S. tax purposes the conforming adjustment will be accomplished in the following steps:   
     
i. The    conforming    adjustment    will    be    accomplished    between    #U.S.    ENTITY    and    #NON-U.S.    ENTITY,    which    will    be    referred    to here as "U.S. Entity" and "Non-U.S. Entity", respectively. An intercompany payable will be established between U.S. Entity and Non-U.S. Entity in the amount and direction of the net APA Primary Adjustment, as of the last day of such APA Tax    Year.    This    payable    will    be    denominated    in    #CURRENCY.    The    payable    will    be    treated    as    indebtedness    for    all    U.S.    federal tax purposes; provided, however, that the payable will not be treated as indebtedness for purposes of Code section 956 if    the    payable    is    satisfied    within    90    days    of    the    close    of    the    APA    Tax    Year    with    respect    to    which    it    is    established.   
     
ii.  [] The    intercompany    payable    will    bear    interest    at    an    arm's    length    rate.   
     
[] Such    arm's    length    rate    is    not    specified    in    this    APA    and    will    be    determined    under    applicable    legal    principles.   
     
[] Such    arm's    length    rate    is    determined    as    follows.    #DESCRIPTION    OF    ARM'S    LENGTH    RATE    (FOR    EXAMPLE,    FOR A U.S. DOLLAR PAYABLE, A CERTAIN APPLICABLE FEDERAL RATE UNDER U.S. TREASURY REGULATIONS SECTION 1.482-2(a)(2)(iii)(C)).   
     
[] This    APA    is    bilateral    or    multilateral.    As    agreed    between    the    United    States    and    #COUNTRY(IES),    the    intercompany    payable will not bear interest.   
     
iii. The    intercompany    payable    must    be    satisfied,    in    a    manner    permitted    under    Rev.    Proc.    99-32    or    any    successor    revenue    procedure,    within    90    days    of    the    later    of    (1)    the    date    for    timely    filing    (with    extensions)    of    the    U.S.    return    for    such    APA    Tax    Year,    and    (2)    the    APA's    U.S.    Effective    Date.    If    any    amount    of    the    intercompany    payable    is    not    otherwise    so    satisfied    within    that    90-day period, such amount, on the last day of such period, will be deemed (1) to be paid between U.S. Entity and Non-U.S. Entity    in    satisfaction    of    the    payable,    and    (2)    to    be    paid    (directly    or    indirectly,    as    specified    below)    between    U.S.    Entity    and    Non-U.S. Entity in the opposite direction (that is, from the deemed recipient of the intercompany payable to the deemed payor of the intercompany payable). These two deemed payments on the same day will cancel and thus yield no net cash flow between these two entities. The second of these deemed payments will be referred to as the "reverse payment." The reverse payment will be deemed to be as follows:   
     
A. If the net APA Primary Adjustment increases U.S. income:   
     
[] The    reverse    payment    will    be    deemed    to    be    a    contribution    to    capital    from    U.S.    Entity    to    Non-U.S.    Entity,    either    directly, or indirectly through the corporate chain, as the case may be.   
     
[] The    reverse    payment    will    be    deemed    to    be    a    distribution    from    U.S.    Entity    to    Non-U.S.    Entity,    either    directly,    or    indirectly through the corporate chain, as the case may be.   
     
[] The    reverse    payment    will    be    deemed    to    be    a    distribution    from    U.S.    Entity    to    #COMMON    PARENT,    either    directly,    or indirectly through the corporate chain, as the case may be, followed by a contribution by #COMMON PARENT to non-U.S. Entity, either directly or indirectly through the corporate chain, as the case may be.   
     
B. If the net APA Primary Adjustment decreases U.S. income:   
     
[] The    reverse    payment    will    be    deemed    to    be    a    contribution    to    capital    from    non-U.S.    Entity    to    U.S.    Entity,    either    directly, or indirectly through the corporate chain, as the case may be.   
     
[] The    reverse    payment    will    be    deemed    to    be    a    distribution    from    non-U.S.    Entity    to    U.S.    Entity,    either    directly,    or    indirectly through the corporate chain, as the case may be.   
     
[] The    reverse    payment    will    be    deemed    to    be    a    distribution    from    non-U.S.    Entity    to    #COMMON    PARENT,    either    directly, or indirectly through the corporate chain, as the case may be, followed by a contribution by #COMMON PARENT to U.S. Entity, either directly, or indirectly through the corporate chain, as the case may be.   
     
This situation is generally described in paragraph 4.66 of the OECD Guidelines, and in U.S. Treasury Regulations section 1.482-1(g) and Rev. Proc. 99-32.   
     
In this APA, if applicable:   
     
[]* For    the    APA    Tax    Year(s)    ending    on    or    before    #DATE,    it    is    agreed    that    the    net    APA    Primary    Adjustment(s),    if    any,    from    the    application    of    the    Covered    Methods    are    as    follows:    #FOR    EACH    SUCH    APA    TAX    YEAR,    DESCRIPTION    OF    WHETHER    THERE IS A NET APA PRIMARY ADJUSTMENT, AND IF SO THE AMOUNT AND DIRECTION. IF THERE IS MORE THAN ONE COVERED METHOD FOR A REPATRIABLE ISSUE, ALSO PROVIDE A TABLE SHOWING THE DERIVATION,    FOR    EACH    SUCH    APA    TAX    YEAR,    OF    THE    NET    APA    PRIMARY    ADJUSTMENT    FROM    THE    APA    PRIMARY ADJUSTMENT (OR LACK OF ONE) FOR EACH SUCH COVERED METHOD. #FOR ANY SUCH NET APA PRIMARY ADJUSTMENTS, DESCRIPTION OF THE MEANS BY WHICH THE CONFORMING ADJUSTMENT HAS BEEN OR WILL BE SATISFIED, WITH APPLICABLE DATES.   
     
 7. Definitions      
     
The    definitions    in    the    table    below    apply    to    this    APA.   
     
The    defined    terms    in    this    table    include    certain    measures    of    profitability    (e.g.,    operating    profit,    operating    margin).    Most    of    these    measures are ultimately defined in terms of sales revenue, operating expenses, and operating assets (defined terms), and cogs and non-interest-bearing liabilities (undefined terms). The definitions of sales revenue, operating expenses, and operating assets    contain    a    limitation    to    the    relevant    business    activity.    Similarly,    each    use    of    the    terms    "cogs"    and    "non-interest-bearing    liabilities" is accompanied by a limitation to the relevant business activity. Therefore, the measures of profitability based on these five terms all are defined with a limitation to the relevant business activity. (Certain other measures of profitability in this table relate to the provision of services and are defined with reference to those services. Therefore, those measures as well contain a limitation to the relevant business activity.)   
     
           
     
           
   
       
   
   
APPENDIX B 
   
CRITICAL ASSUMPTIONS 
   
The Critical Assumptions are:
   
1. The Covered Entities' business activities, functions performed, risks assumed, assets employed, contractual terms, markets, and economic conditions faced in relation to the Covered Issue(s) will remain materially the same as described in the APA Request. For this purpose, a mere change in business results will not be a material change.
   
2. The Covered Entities' financial accounting methods and classifications and methods of estimation in relation to the Covered Issue(s) and Covered Method(s) will remain materially the same as described or used in the APA Request.
   
If indicated, the effect of a critical assumption failure may be limited as follows:
   
[] The   failure    of    Critical    Assumptions    #XXX    listed    above    will    affect    the    effectiveness    of    this    APA    only    as    to    Covered    Issues    #YYY listed in Appendix A. Thus, as to the other Covered Issues, the APA will remain in force (except to the extent some other condition affects the APA's effectiveness as to those Covered Issues).   
     
The Covered Entities will not cause a critical assumption to fail for the purpose of rendering the APA ineffective, unless they have an independent business justification (unrelated to rendering the APA ineffective) for the action that causes the critical assumption to fail. If one or more Covered Entities do cause a critical assumption to fail for the purpose of rendering the APA ineffective, and without such independent business justification, then the Covered Entities will not withhold consent to an amendment to this APA to the effect that this APA will continue in force without regard to such failure. In this case, if a Covered Entity refuses to sign such an amendment, such an amendment may be executed without such signature and will then have the same force and effect as if the amendment had such signature.   
     
     
 APPENDIX C      
     
 APA RECORDS AND ANNUAL REPORT      
     
 APA RECORDS      
     
The APA Records will consist of all documents listed below for inclusion in the Annual Report, as well as all documents, notes, work papers, records, or other writings that support the information provided in such documents.   
     
 ANNUAL REPORT      
     
An Annual Report must be submitted for each APA Tax Year in accordance with paragraph 6(e) of the APA and section 7.02 of Rev. Proc. 2015-41.   
     
For each APA Tax Year, the Annual Report (and each copy or version as required by paragraph 6(e) of the APA) will include:   
     
1. Two copies of a properly completed APA Annual Report Summary in the form of Appendix D to this APA, one copy of the form bound with, and one copy provided separately from, the rest of the Annual Report. (The electronic version of the Annual Report need have only one copy of this item.)   
     
2. A table of contents organized according to the additional required items listed below.   
     
3. For    such    APA    Tax    Year    and    the    corresponding    APA    Covered    Year,    statements    that    fully    identify,    describe,    analyze,    and    explain:   
     
a. All    material    differences    between    the    Covered    Entities'    business    activities,    functions    performed,    risks    assumed,    assets    employed, contractual terms, markets, and economic conditions faced in relation to the Covered Issues during such APA Covered    Year    from    those    same    items    described    in    the    APA    Request.    If    there    have    been    no    such    material    differences,    the    Annual Report will include a statement to that effect.   
     
b. All material differences between Covered Entities' financial accounting methods and classifications and methods of estimation in relation to the Covered Issues and Covered Methods used during such APA Covered Year, from those described or used in the APA Request. If any change was made to conform to changes in the Applicable Accounting Standard, U.S. Taxpayer will specifically identify the change. If there have been no such material differences, the Annual Report will include a statement to that effect.   
     
c. Regarding notices under paragraph 16 of the APA:   
     
i. A current statement of how the IRS should provide such notices to U.S. Taxpayer (and, if applicable, to U.S. Taxpayer's representative).   
     
ii. A copy of any such notices that were submitted by U.S. Taxpayer to the IRS after the last Annual Report was submitted (or, if there was no prior Annual Report, after the APA was executed). If there were no such notices, the Annual Report will include a statement to that effect.   
     
d. Any failure of any Critical Assumption. If there has been no such failure, the Annual Report will include a statement to that effect.   
     
e. Whether or not material information submitted while the APA Request was pending is discovered to be false, incorrect, or incomplete, and if so a correction or completion of that information, as applicable.   
     
f. Any change to any entity classification for federal income tax purposes (including any change that causes an entity to be disregarded for federal income tax purposes) of any Worldwide Group member that is a Covered Entity or is otherwise relevant to the Covered Issue(s) or Covered Method(s).   
     
g. The following regarding any APA Primary Adjustments made for such APA Tax Year under Appendix A to this APA:   
     
i. The amounts of any APA Primary Adjustments;   
     
ii. The circumstances that led to such APA Primary Adjustments being necessary;   
     
iii. A    calculation    of    the    net    APA    Primary    Adjustment    as    defined    in    Appendix    A    to    this    APA;    and   
     
iv.    A complete description of the means by which the conforming adjustment (see section 6 of Appendix A to this APA) is accomplished, including:   
     
A. a description of any accounts payable established, including the entities involved and when the payables are established;   
     
B. a description of any amounts paid or deemed paid (including amounts paid or deemed paid in satisfaction of an intercompany payable established as described in section 6 of Appendix A to this APA, and including any deemed reverse payments as described in section 6 of Appendix A to this APA), that specifies the entities involved, when the amounts are paid or deemed paid, and by what means any amounts are actually paid; and   
     
C. the character (such as capital, ordinary, income, expense, dividend, contribution to capital) and country source of any payments and deemed payments, and the specific affected line item(s) of any affected U.S. return;   
     
h. A detailed numerical explanation of how the result of the application of the Covered Methods is reflected on the U.S. return, with reference to particular line items on the U.S. return. This explanation shall include the amounts, description, reason for, and financial analysis of any book-tax differences, as reflected on Schedule M-1 or Schedule M-3 of the U.S. return for such APA Tax Year, that (i) are relevant to an APA Primary Adjustment, (ii) otherwise are relevant to the book and tax treatment of any income or expense item that is part of the Relevant Financial Data for, or is determined by, any Covered Method for such APA Tax Year, or (iii) otherwise are relevant to the APA. U.S. Taxpayer shall not simply attach a copy of the pertinent schedule.    Rather,    U.S.    Taxpayer    shall    specifically    identify    the    relevant    items    from    that    schedule    and    shall    describe    in    appropriate detail the nature of those items, how they arose, and how they are accounted for.   
     
i. Whether or not U.S. Taxpayer contemplates requesting, or has requested, to renew, modify, or cancel the APA.   
     
4. The Financial Statements and additional statements required under paragraph 6(f) of the APA, for such APA Tax Year and for any other    tax    year    whose    financial    data    are    relevant    to    compliance    with    the    APA    for    such    APA    Tax    Year;   
     
5. A    financial    analysis    that    includes    U.S.    Taxpayer's    calculations    to    apply    the    Covered    Method(s)    to    the    Covered    Issue(s)    for    such    APA Covered Year and supports those calculations with additional material that ties those calculations to the Financial Statements. The intent of this requirement is that the analysis submitted should provide a clear, complete, detailed, and self-contained means by which the IRS can verify compliance with the Covered Method(s). This requirement is further explained as follows:   
     
a. The additional material must support every numerical input to U.S. Taxpayer's calculations.   
     
b. The additional material could include, for example, consolidating financial statements, segmented financial data, and records from the general ledger.   
     
c. Where segmented data are used, U.S. Taxpayer must specify in detail how it accomplished the segmentation, including how it made allocations and apportionments, including (i) the definition and calculation of any apportionment keys used, and (ii) the calculations applying such keys. The inputs used for those various calculations must be tied to the Financial Statements.   
     
d. The    additional    material    must    be    annotated    sufficiently    to    let    the    IRS    easily    trace    U.S.    Taxpayer's    entire    calculations    to    objective, verifiable sources of data.   
     
e. Where    needed    for    clarity,    terms    must    be    defined.   
     
6. The    financial    results    pertinent    to    the    Covered    Method(s),    for    such    APA    Covered    Year    and    all    prior    years,    entered    along    with    data    concerning the Covered Method(s) in an electronic results template available by contacting APMA.   
     
7.  []  _  An    organizational    chart    for    Worldwide    Group,    revised    annually    to    reflect    all    ownership    or    structural    changes    of    the    Covered    Entities and any other entities that are relevant to the Covered Issue(s) or are otherwise relevant to the Covered Method(s).   
     
[]* An    organizational    chart    for    a    part    of    Worldwide    Group    that    includes    all    Covered    Entities    and    includes    any    other    entities    relevant to the Covered Issue(s) or Covered Method(s), revised annually to reflect all ownership or structural changes of entities that are involved in the Covered Issue(s) or are otherwise relevant to the Covered Issue(s) or Covered Method(s).   
     
8. A valid IRS Form 2848 "Power of Attorney and Declaration of Representative" for any representative to receive notices under paragraph 16 of this APA.   
     
9. A copy of the APA and any amendment.   
     
10. A penalty of perjury statement, executed in accordance with Rev. Proc. 2015-41, sections 7.02(8) and (9).   
     
     
 APPENDIX D      
     
 APA ANNUAL REPORT SUMMARY FORM      
     
The APA Annual Report Summary on the next page is a required APA Record. APMA supplies some of the information requested on the form. U.S. Taxpayer is to supply the remaining information requested by the form and submit the form as part of its Annual Report.   
     
           
     
APA Information 
   
       
   
APA Annual Report Information: 
   
       
   
Date Annual Report Filed (to be filled in by APMA):