The OECD Model Tax Convention includes a provision for a mutual agreement procedure (MAP) in Article 25. Under this procedure the competent authorities of the two contracting states are required to endeavor to reach agreement to resolve issues that could give rise to taxation that is contrary to the provisions of the tax treaty.

The OECD has released a summary of mutual agreement procedure (MAP) statistics for 2013, for OECD member countries and some partner countries including China. The outstanding cases at the end of 2013 amounted to 4,566, including 732 in the US, 858 cases in Germany, 618 cases in France, 160 in the UK and 123 in the Netherlands. In China there were 43 MAP cases outstanding at the end of 2013.

The number of MAP cases open at the end of 2013 represented an increase of 12.1% compared to the previous year. The average time required for completion of MAP cases in 2013 was 23.57 months which is slightly lower than the statistics in the previous three years.

The statistics therefore indicate that taxpayers are continuing to use the mutual agreement procedure and this use has increased over the years. There have however been concerns about the length of time and compliance costs involved in the mutual agreement procedure and these may continue in the future. The OECD has included in the Model Tax Convention a provision for an arbitration procedure be commenced if the competent authorities do not reach agreement within two years of presentation of the case, however this provision has not yet been implemented in many tax treaties. The mutual agreement procedure has however been a useful addition to the possible remedies to be used by the taxpayer where there is an issue, for example the possibility of double taxation owing to a transfer pricing adjustment.