BEPS Effort Seen Likely to Increase Double Tax Disputes

Michael Danilack, the U.S. competent authority, predicted the Organization for Economic Cooperation and Development’s efforts to combat base erosion and profit shifting will increase the pressure on mutual agreement procedures worldwide. This jibes with a recent comment Joseph Andrus, head of the OECD’s transfer pricing unit, that some of the new rules to come out of the BEPS action plan “could in the initial stages lead to more disputes, rather than fewer.”

Transfer Pricing Report’s Dolores W. Gregory reported on Danilack’s comments; excerpts from her story, published in the Nov. 28 issue, appear below.


Nov. 25--International efforts to address base erosion will put more pressure on competent authorities worldwide to ensure that mutual agreement procedures are up to date at a time when MAP programs are facing restricted resources, a U.S. official said Nov. 22.

Michael Danilack, the U.S. competent authority and deputy commissioner (International) with the Internal Revenue Service, noted that item 14 of the OECD's action plan to combat base erosion and profit shifting (BEPS) is devoted to dispute resolution. It is designed to study whether there may be barriers to efficient and effective competent authority procedures under the model treaty or the commentaries, he said.

“Are there countries not providing full access to MAP? Should there be changes to encourage multilateral resolution of issues?” he asked, noting that “arbitration is on the table”—as is the matter of what must be done to ensure that countries adopt arbitration.

But if all the other actions in the BEPS plan are undertaken, he said, “there will be pressure on competent authorities around the world to ensure that their mutual agreement procedures are up to date and ready to accommodate the type of discussion they will need to have in a world that is more focused on international tax matters.”

Because of BEPS, some countries may become more aggressive, he added—and any aggressive behavior will put additional pressure on the competent authorities, he said.

The BEPS project has arisen at a time when competent authorities worldwide are strapped for resources, Danilack said. He noted that at a recent meeting of competent authorities from 25 countries, the need to seek more resources from their respective governments was a hot topic of discussion.

The MAP Forum, organized under the auspices of the OECD's Forum on Tax Administration, held its first meeting in mid-November. Danilack said he has been working on developing the forum for nearly a year and a half.

“We need a forum to talk about systemic problems and shared issues,” Danilack said, where “we can work together to address whether all countries are adequately resourced or empowered to get to resolution the same way.”


 Dispute resolution and other items on the BEPS action plan and will be discussed in depth at the Bloomberg BNA-Baker & McKenzie Global Transfer Pricing Conference in Paris March 31-April 1. See the agenda at

Molly Moses, Managing Editor, Transfer Pricing Report