Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘mutual agreement procedure’

OECD’s MAP: Timeline & Best Practices

As the OECD renews its efforts to improve the process of dispute resolution, many practitioners, tax authorities and advisors have concluded that the current Mutual Agreement Procedure (MAP) process is slow, inefficient and not effective in resolving tax disputes and avoiding double taxation.

However, it is worthwhile to start with a suggested timeline and Best Practices from OECD’s Manual on Effective Mutual Agreement Procedures (MEMAP) published in 2007.  Annex 1 and 2 provide a suggested timeline and 25 Best Practices (summarized below) that are each discussed in MEMAP.  

To the extent these Best Practices and recommendations have not been implemented by countries around the world, one questions what will be the difference this time around?  It seems that the OECD has tried to provide remedies, although many countries do not view these recommendations as a priority or transparency objective to resolve disputes effectively.  

While the effectiveness of dispute resolution mechanisms continue, it would be prudent to  provide the tax authorities, including competent authorities, this Manual as a reinforcement of Best Practices and timelines that should be proactively followed. 

A link to the Manual is provided for reference:

http://www.oecd.org/ctp/38061910.pdf

Appendix 2: Best Practices:

  1. Resolving and publishing issues of interpretation or application
  2. Robust use of Article 25(3) power to relieve double taxation
  3. Principled approach to resolution of cases
  4. Transparency and simplicity of procedures for accessing and using the MAP
  5. Providing complete, accurate, and timely information to the competent authorities
  6. Allowing electronic submissions
  7. Allowing early resolution of cases
  8. Earlier notification of a potential case
  9. Liberal interpretation of time limits and advising of treaty rights
  10. Avoiding exclusion from MAP relief due to late adjustments or late notification
  11. Consideration of MAP assistance for cases described as “tax avoidance”
  12. Countries eliminate or minimize “exceptions” to MAP
  13. Taxpayer presentations to competent authorities
  14. Cooperation and transparency
  15. Face-to-face meetings between competent authorities
  16. Bilateral process improvements
  17. Decision summaries
  18. Recommendation for MAP cases beyond two years
  19. Avoid blocking MAP access via audit settlements or unilateral APAs
  20. Interest relief
  21. Suspension of collections during MAP
  22. Readily available access to a competent authority
  23. Independence and resources of a competent authority
  24. Performance indicators for the competent authority function and staff
  25. Implementing and promoting ACAP and bilateral APA programs

 

 

 

 

EU dispute resolution: time for your voice to be heard

The European Commission has recently released a public consultation on improving double taxation dispute resolution mechanisms, with comments accepted through 10 May 2016.  It is a process / Best Practices approach to enact future efficiencies.  A summary story and consultation links are provided for reference:

http://ec.europa.eu/taxation_customs/common/consultations/tax/double_tax_dispute_en.htm

http://ec.europa.eu/taxation_customs/resources/documents/common/consultations/tax/survey_consult_doc_double_tax_en.pdf

Highlights:

  • Double or multiple taxation by EU Member States is recognized as a barrier to operate freely across borders.
  • A legislative proposal is expected by the end of 2016, following the comment period.
  • The Mutual Agreement Process (MAP) currently is not bound to reach a solution.
  • The EU Arbitration Convention (re: transfer pricing cases and permanent establishment profit attribution) is acknowledged as a current process, but limited in scope.
  • The last such public consultation (2010) resulted in an arbitration provision, although it has not been mandated in double tax conventions.
  • Stakeholders’ views are requested on the relevance of removing double taxation, EU objectives and proposed solutions.

This document is pivotal in establishing practical and efficient EU dispute resolution mechanisms ongoing, and all interested parties should submit thoughtful input.

The proposal, as noted, would only be effective between EU Member States, not between one Member State and another non-EU jurisdiction or between non-EU jurisdictions.  The EU has been a strong proponent in leading global best practices in the post-BEPS environment.  Therefore, global consistency of the EU approach is also encouraged, especially by countries having no such dispute mechanism.  

Additionally, other  countries’ need to rethink sovereignty arguments in trying to evade / negate the effect that such transparent measures would have on their ability to address local tax practices.  

 

 

 

 

 

 

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