Advance Pricing Agreements in Low-Income Countries: ICTD Working Paper

Working Paper 220
Implementation of
Advance Pricing
Agreements: The Case
for Low- and Lower-
Middle-Income
Countries
Mary Ongore and Prisca Musibi
May 2025

ICTD Working Paper 220
Implementation of Advance Pricing
Agreements: The Case for Low- and
Lower-Middle-Income Countries
Mary Ongore and Prisca Musibi
May 2025

2
Implementation of Advance Pricing Agreements: The Case for Low- and Lower-Middle-Income
Countries
Mary Ongore and Prisca Musibi
ICTD Working Paper 220
First published by the Institute of Development Studies in May 2025
© Institute of Development Studies 2025
ISBN: 978-1-80470-288-8
DOI: 10.19088/ICTD.2025.032
This is an Open Access paper distributed under the terms of the Creative Commons Attribution
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ictd.ac
Working Paper 220
Implementation of Advance Pricing Agreements: The Case for Low- and Lower-Middle-Income
Countries
3
Implementation of Advance Pricing
Agreements: The Case for Low- and
Lower-Middle-Income Countries
Mary Ongore and Prisca Musibi
Summary
Advanced pricing agreements (APAs) aim to prevent transfer pricing (TP)
disputes, increase certainty, and ultimately reduce the TP risk. This is achieved
through taxpayers and tax authorities agreeing in advance on the criteria for
determining the arm’s length pricing of transactions. These agreements are
typically valid for several years, assuming that critical assumptions remain
unchanged.
Interest in APAs has been steadily increasing, seemingly partly due to Action 14
of the Base Erosion and Profit Shifting (BEPS) project, which recommends the
facilitation of effective dispute resolution mechanisms. This includes the use of
Bilateral Advance Pricing Agreements (BAPAs) where feasible.
Many studies on APAs have largely focused on high-income countries – when
they feature low- and lower-middle-income countries (LLMICs) it is mainly China
and India. The challenges LLMICs face when enforcing TP legislation are
different to those faced by high-income countries. This paper addresses this gap
by presenting the findings of a study on four LLMICs – Indonesia and Vietnam,
which have active APA programmes, and Nigeria and Uganda, which have APA
provisions in their legislation but have yet to operationalise their regimes.1
By examining the lived experience of these countries the study aims to
interrogate the challenges faced, and provide recommendations for implementing
APA regimes in LLMICs, which have not been as prominently featured in existing
literature.
Based on interviews with various stakeholders in the case study countries, we
reasonably conclude that a properly implemented APA regime can benefit
1 As of May 2022, when the case studies were identified, the World Bank classified Uganda as a low-income
economy. Indonesia, Nigeria, and Vietnam were classified as lower-middle-income economies. Indonesia’s
classification has subsequently changed to upper-middle-income.
Nigeria released detailed APA guidelines after the research study’s cut-off date, and operationalised its APA
regime with effect from 1 January 2025.

ictd.ac
Working Paper 220
Implementation of Advance Pricing Agreements: The Case for Low- and Lower-Middle-Income
Countries
4
LLMICs. It can increase tax certainty, and improve the relationship both between
tax authorities and taxpayers, and tax authorities and treaty partners.
However, despite being beneficial, an APA regime should not be an automatic
policy choice. A pragmatic approach should be taken, especially where a
country’s TP regime is still in the early stages of implementation, or where,
despite being present, the revenue authority has not built taxpayer confidence
through consistent administration of TP regulations. Where a decision is made to
implement an APA regime, investing in building the capacity of TP units plays a
crucial role in developing and running a successful APA regime.
Keywords: transfer pricing; advance pricing agreements; dispute prevention;
low- and lower-middle-income countries.
Mary Ongore is a Kenyan legal professional with extensive experience in
taxation. She holds an LLB degree from the University of Leeds, and an LLM in
Tax Law from Queen Mary University of London. She is a PhD candidate at the
University of Nairobi, specialising in tax. Her research revolves around
international tax, fiscal policy, and illicit financial flows. Mary worked as a Tax
Advisor at KPMG in the UK, and an employment tax advisor at Zurich Insurance
in the UK. She has since worked for Strathmore University as a Doctoral Fellow,
at the University of Nairobi as a Tutorial Fellow, and at Dentons Hamilton
Harrison & Mathews as a Tax Associate. She has conducted research on tax and
gender, tax treaties, tax and human rights, and taxpayers’ rights as an
independent consultant.
Prisca Musibi is an early career tax researcher. She has diverse experience in
domestic and international tax law from her time at a leading Big 4 firm in Nairobi,
as well as engagements with think tanks in Nairobi and Geneva. Prisca holds an
LL.M specialising in International Taxation from the University of Cape Town,
South Africa, and is an advocate of the High Court of Kenya.