On 16 September 2024 the simplified peer review report on Lithuania was issued under Action 14 of the project on base erosion and profit shifting (BEPS).

Members of the OECD Inclusive Framework have committed to implementing the minimum standard under action 14 of the project on base erosion and profit shifting (BEPS) on strengthening the effectiveness of dispute resolution procedures. Dispute resolution relating to bilateral tax treaties takes place through the mutual agreement procedure (MAP) in Article 25 of the OECD Model, under which countries endeavour to resolve disputes related to the interpretation and application of tax treaties.

After the conclusion of the initial two-stage peer review process in 2022, a continued monitoring process has been launched by the OECD for all Inclusive Framework member countries. Countries that already have significant MAP experience are to undergo a full peer review process once every four years; and countries that do not yet have meaningful MAP experience are to be subject to a two-stage simplified peer review process. The report on Lithuania sets out the results of stage 1 of the simplified peer review of the implementation of the Action 14 minimum standard.

The peer review report notes that Lithuania has a relatively large tax treaty network with 58 tax treaties in place and has also signed the EU Arbitration Convention. Lithuania has established a MAP programme and has gained significant experience with the resolution of MAP cases. The peer review report concludes that Lithuania meets almost all of the elements of the Action 14 minimum standard. All Lithuania’s bilateral tax treaties contain a provision relating to the MAP, and the provisions are mostly in line with the OECD Model.

To be fully in line with all the important areas of an effective dispute resolution mechanism under the Action 14 minimum standard, the report notes that Lithuania needs to amend and update three of its tax treaties. This can be done through the multilateral instrument (MLI) to include BEPS-related provisions into bilateral tax treaties; or in other cases treaties can be amended through bilateral negotiation.

The peer review report notes that Lithuania has a bilateral APA programme in place, but this does not provide for the roll-back of bilateral APAs. Lithuania provides access to the MAP in all eligible cases. There is a documented bilateral consultation and notification process for situations where the competent authority considers that the objection raised by the taxpayers in a MAP request is not justified. Lithuania also has clear and comprehensive guidance on the availability of the MAP and how it applies this procedure in practice, in relation to bilateral tax treaties and the EU Arbitration Convention.

In the period from 2020 to 2022 the average time necessary for Lithuania’s competing authority to complete MAP cases was 31.50 months. This exceeded the target timeframe of 24 months for resolving MAP cases. The peer review report notes that Lithuania should closely monitor whether the resources available for its competent authority function are adequate to ensure that pending and future MAP cases are resolved in a timely and efficient manner. If necessary, additional resources should be used to manage the significant increase in the number of MAP cases.