Strategizing Multinational Tax Risks

MAP Vision: Forum on Tax Administration

The Forum on Tax Administration (FTA), representing heads of tax administrations from 38 countries, concluded their 9th meeting on 24 October, 2014.  The meeting represented attendance by over 130 delegations, including representatives from the African Tax Administration Forum (ATAF), Inter-American Center of Tax Administrations (CIAR), Centre de Rencontre des Administrations Fiscales (CREDAF), International Monetary Fund (IMF) and the Intra-European Organisation of Tax Administrations (IOTA).  The meeting included strategic visions for the Mutual Agreement Procedure (MAP) and Co-operative Compliance programs.

Links to the meeting summary and MAP vision are included for reference:

http://www.oecd.org/ctp/administration/fta-2014-communique.pdf

http://www.oecd.org/site/ctpfta/map-strategic-plan.pdf

The following actions were agreed:

• Enhanced cooperation strategy, based on existing legal instruments.
• Created a new international tax platform, Joint International Tax Shelter Information and Collaboration (JITSIC Network) to focus on tax avoidance.
• Implement the new standard on automatic exchange of information while protecting taxpayer confidentiality.
• Improve practical operation of Mutual Agreement Procedure (MAP) to address double tax issues more quickly and efficiently, integrated with the OECD BEPS action item.  Competent authorities of all member countries are “encouraged” to actively participate in this initiative.
• Promote a voluntary compliance structure.
• Develop principles on Co-operative Compliance arrangements that form an integral part of effective tax control frameworks.

MAP Strategic Plan summary – “Statement of Vision and Commitment”

1. Collaboration of the FTA MAP Forum with other multilateral bodies, including OECD’s Working Party 1’s Focus Group, to further its goals.
2. Participating Competent Authorities (CAs) commit to the stated goals and be accountable thereto.
3. Allocation of adequate staffing levels and resources to meet CAs working demands.
4. Adequate training programs and personnel practices.
5. FTA MAP Forum’s engagement to address resource challenges.
6. Empowerment of CAs to effect agreements in accordance with principles in the respective tax conventions.
7. Absence of undue influence by administrative policies, practices or goals.
8. Support resolution of MAP cases in accordance with multilateral principles, avoiding efforts such as maximizing revenue collection.
9. Adoption of principle based and mutual trust principles.
10. Adopt Best Practices in the pursuit of new initiatives to streamline and enhance processes to expedite MAP resolution.
11. Sharing MAP Best Practices among FTA MAP participants.
12. New MAP processes to elevate difficult cases.
13. Enhance taxpayer’s involvement in case resolution, including bilateral/multilateral meetings and sharing case developments.
14. Seek ways to avoid MAP cases, including APAs, joint audits, “roll-forward” adjustments and other techniques.
15. Use multilateral MAP procedures.
16. Adopt agreements for issue consistency.
17. Avoidance of MAP manipulation by auditors.
18. Deliver training on double taxation and CA processes via a “Global Awareness Training Module.”

The above meeting commitments and objectives are welcome as tax controversies increase and MAP procedures have seeming lost the elements of  timeliness, cost-effective resolution, avoidance of double taxation, transparency and efficiency.

It is hopeful that most tax administrations endorse, and commit to, the above MAP framework in an effort to achieve Best Practices for a win–win opportunity.