Trust Bloomberg Tax's Premier International Tax offering for the news and guidance to navigate the complex tax treaty networks and business regulations.
By Sony Kassam
The U.S. and 47 countries took an average of 30 months to resolve transfer pricing disputes in 2016, missing the OECD’s goal of a 24-month time frame.
Other mutual agreement procedure (MAP) cases took less time to complete at an average of 17 months, according to the Inclusive Framework’s 2016 MAP statistics published by the Organization for Economic Cooperation and Development Nov. 27.
Jurisdictions that reported MAP data collectively had an inventory of about 8,000 cases, the OECD said. MAP cases seek to resolve double-taxation disputes between countries.
Action 14 of the OECD’s 15-item action plan to combat base erosion and profit shifting (BEPS) is devoted to improving the dispute-resolution process and requires MAP cases to be resolved within 24 months. The action, released in the October 2015 BEPS report, requires countries to adopt the OECD’s framework for reporting on cross-border tax disputes.
Members of the Inclusive Framework—the nations signing on to the BEPS project—reported their 2016 MAP statistics under the new collaborative approach. That approach distinguishes transfer pricing cases from other MAP cases. The transfer pricing category comprises cases where a taxpayer’s request relates to either the attribution of profits to a permanent establishment or the allocation of profits between related-party groups.
“Over 85% of MAPs concluded in 2016 resolved the issue,” OECD said. “Almost 60% of MAP cases closed were resolved with an agreement fully resolving the taxation not in accordance with the tax treaty and almost 20% of them were granted a unilateral relief while almost 5% were resolved via domestic remedy.”
The MAP data is further divided into cases initiated before Jan. 1, 2016, and those initiated after that date for a given jurisdiction. For cases started before Jan. 1, 2016, countries can follow their own computation rules. For the latter set, countries must follow the OECD’s MAP statistics reporting framework computation rules, and cases initiated in one country are also reported in the other country involved.
The organization also published transfer pricing MAP statistics per country.
The OECD is requesting taxpayer input for Stage 1 peer reviews of the following countries’ MAP procedures and related issues: Australia, Ireland, Israel, Japan, Malta, Mexico, New Zealand, and Portugal.
Taxpayers are to submit their input by Dec. 22. The peer reviews are part of the OECD’s initiative to measure the progress of the Inclusive Framework and their commitment to Action 1. Two sets of countries have completed the first stage of the peer review process and another set of countries’ peer reviews are underway, the OECD said.
Stage 1 involves an initial evaluation of a country’s MAP procedure, while stage 2 involves a follow-up on a country’s progress in modifying their dispute resolution mechanisms based on the OECD’s suggestions for improvement.
To contact the reporter on this story: Sony Kassam in Washington at email@example.com
To contact the editor responsible for this story: Kevin A. Bell at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)