On 24 January 2023 the OECD’s Inclusive Framework on base erosion and profit shifting (BEPS) agreed a new assessment methodology for continuing the peer review process under BEPS action 14 to improve tax dispute resolution mechanisms. The Inclusive Framework has also added new data points to be included in the annual Mutual Agreement Procedure (MAP) Statistics and has drawn up a new annual framework for reporting Advance Pricing Arrangement (APA) Statistics.
The Inclusive Framework is still considering the issue of possible changes to the minimum standard under BEPS Action 14.
BEPS Action 14 Assessment Methodology
As part of the updated assessment methodology for the Action 14 peer reviews, there will be a simplified peer review process for jurisdictions that have not yet had much experience with mutual agreement procedure (MAP) cases. This simplified process would aim to help the jurisdictions to develop a stronger MAP programme to improve their ability to deal with future MAP cases. The procedure is commencing from January 2023 and will be carried out under a new assessment schedule.
Countries that already have meaningful experience of the MAP process will be subject to the full peer review process beginning from January 2024. Each qualifying jurisdiction will be subject to a peer review under BEPS action 14 once in every four years. The Inclusive Framework will release the assessment schedule for the full peer review process by the end of 2023.
MAP Statistics Reporting Framework
Member jurisdictions of the Inclusive Framework are committed to implementation of the Action 14 minimum standard and this includes the reporting of MAP statistics under an agreed reporting framework. To provide a clearer picture of their MAP practices and to improve transparency, jurisdictions will be required to report additional data points for post-2015 MAP cases as part of their reporting on MAP Statistics. This will provide a clearer overview of their MAP procedures and how they are functioning in practice and will therefore contribute to improved transparency.
In addition to the data previously required in the MAP statistics, countries will be required to break down the average time needed to close cases in the unilateral and bilateral stages of a MAP. They will also need to identify the age of pending cases. Reporting on these data points will commence from the report on 2023 MAP Statistics, which would normally be expected to be available in 2024.
APA Statistics Reporting Framework
The OECD has noted that progress has been made by countries on advance pricing agreements (APAs) with the help of the Bilateral Advance Pricing Arrangement Manual (BAPAM). All Inclusive Framework members that have an APA programme will be required to report annual statistics on APAs and these will be published on the OECD website in a standard format, with some flexibility to allow countries to report in line with their own rules. These APA Statistics are to be made available from 2024 onwards.