Under Action 14 of the OECD project on base erosion and profit shifting (BEPS), members of the OECD Inclusive Framework have committed to implementing the minimum standard on strengthening the effectiveness and efficiency of dispute resolution procedures. Dispute resolution 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 application of tax treaties.

Following the conclusion of the initial two-stage peer review process in 2022, a continued monitoring process has begun for all Inclusive Framework member countries. Jurisdictions that already have meaningful 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 Serbia published on 16 September 2024 sets out the results of Stage 1 of the simplified peer review of the implementation of the Action 14 minimum standard.

The report notes that Serbia has a relatively large tax treaty network with 64 tax treaties and an established MAP programme, however its experience with resolving MAP cases is relatively small. The report concludes that Serbia generally meets most of the elements of the Action 14 minimum standard. All Serbia’s bilateral tax treaties contain a provision relating to the MAP, 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 Serbia needs to amend and update eight of its tax treaties. This can be done through the multilateral instrument 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 Serbia does not have a bilateral APA programme in place. Serbia provides access to the MAP in all eligible cases, however where tax treaties do not include a time limit for submission of a MAP request, rules under domestic legislation may lead to a filing period of less than three years from the first notification of the relevant action.

Serbia does not have in place a documented bilateral consultation or notification process for situations where the competent authority considers that the objection raised by the taxpayers in a MAP request is not justified. Serbia does however have clear and comprehensive guidance on the availability of the MAP and how it applies this procedure in practice.

Serbia’s MAP inventory remains small, but five of the seven ongoing cases have remained pending for longer than 24 months with only one case being resolved between 1 January 2021 and 31 December 2022. Some treaty partner countries indicated that they experienced some difficulties in resolving MAP cases, not receiving position papers or letters on time. The report therefore recommends that Serbia should ensure sufficient resources are made available for the competent authority function to allow the resolution of MAP cases in a timely and efficient manner.