On 1 February 2021 a virtual public consultation meeting was held as part of the review of BEPS Action 14 on improving tax dispute resolution mechanisms. This follows the publication of a consultation document in November 2020 and the publication of comments received from interested parties.
The consultation is covering issues on dispute resolution and the mutual agreement procedure, including the following:
Use of bilateral APAs
The consultation document suggested that a requirement could be included in the minimum standard for countries to establish a bilateral APA programme. This could be included in the minimum standard although some countries may consider they do not have the resources to properly implement a bilateral APA program.
Expand access to training on international tax issues
If mandatory training for tax audit personnel is included as part of the minimum standard this could help to train more efficient tax auditors and reduce the need for tax adjustments that may lead to costly MAP processes. The OECD and other international organisations are involved in training for developing countries so this is a possibility even if resources are tight in a particular tax administration.
Define criteria to ensure that access to MAP is granted in eligible cases
The standard could include commonly agreed criteria specifying when a case would be eligible for the MAP process, and specifying the information and documentation required from taxpayers. This could give taxpayers more certainty and could increase the range of issues that can be dealt with under the MAP.
Suspension of tax collection
Countries could be required under the minimum standard to suspend tax collection under the same rules that apply when taxpayers pursue available domestic remedies. This would create more certainty for taxpayers entering the MAP. Taxpayers often find it difficult to obtain a refund of tax where this is due after the MAP so they would have more confidence to embark on the MAP.
Legal framework to ensure the implementation of MAP agreements
Domestic time limits may in some countries hinder the implementation of MAP agreements, where a tax treaty does not contain the equivalent of Article 25(2) of the OECD Model ensuring that MAP agreements can be implemented regardless of domestic time limits. The minimum standard might be able to deal with this by requiring countries to add the equivalent of Article 25(2), second sentence, to tax treaties. This may need to be combined with other measures to ensure implementation of the MAP.
Multi-year MAP resolution
Multi-year resolution of recurring issues through a MAP of recurring issues would increase the efficiency of the process where similar issues are arising each year. The relevant time limits would still apply to each year. If added to the minimum standard this would increase the value of the MAP to taxpayers.
Implement MAP arbitration
For some countries a required in the minimum standard to implement MAP arbitration would improve the efficiency and effectiveness of the MAP. However for some countries a commitment to arbitration would give rise to constitutional issues and capacity and cost constraints.
MAP Statistics Reporting Framework
The reporting framework for MAP statistics could include additional data relating to pending or closed MAP cases; and provision of relevant information on other practices related to MAP and APA statistics. This would assist the monitoring of the implementation of the MAP but could give rise to cost concerns for tax administrations with limited resources.
