OECD Reviewing U.S. Handling of Double-Tax Cases

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By Kevin A. Bell

Oct. 31 — The OECD has started to review how effectively the U.S. and five other countries handle cases in which multinational companies assert double taxation under the mutual agreement procedure of bilateral tax treaties.

As part of the review, the Organization for Economic Cooperation and Development is inviting multinationals to answer a questionnaire on their actual access to the MAP provided by Belgium, Canada, the Netherlands, Switzerland, the U.K. and the U.S., according to an Oct. 31 news release. This first batch of reviews is to be launched by December.

The OECD “invites taxpayers to provide input on specific areas relating to access to MAP, clarity and availability of MAP guidance and the timely implementation of MAP agreements,” the Oct. 31 document said, noting that “taxpayers are the main users of the MAP.”

The OECD Oct. 20 released its terms of reference for analyzing the way countries review their peers’ handling of MAP cases. The organization said it will evaluate whether 44 countries are implementing the minimum standards set forth for resolving cross-border disputes under its Action Plan on Base Erosion and Profit Shifting. Dispute resolution under treaties’ MAP procedures is covered in Action 14 under the 15-item BEPS action plan.

In the final report on Action 14, issued in October 2015, countries agreed to ensure that treaty obligations related to MAP should be fully implemented in good faith, and that MAP cases should be resolved in a timely manner. Most of the other BEPS action items were designed to curb aggressive tax planning, but Action 14—the only action in the BEPS project that taxpayers championed—was devoted to improving the process for resolving governments’ overlapping tax claims on a multinational company’s income.

The OECD is carrying out its work on dispute resolution through the Forum on Tax Administration, which has a separate forum on MAP. Taxpayers wishing to respond to the questionnaire should submit answers to fta.map@oecd.org by Nov. 28.

17 More Jurisdictions

On Oct. 20, the OECD listed 44 countries to be peer reviewed: Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Latvia, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Russia, Saudi Arabia, the Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, the U.K. and the U.S.

In an Oct. 31 schedule, the OECD added 17 more jurisdictions to the list: Aruba, Bulgaria, Brunei, Croatia, Curacao, Guernsey, Hong Kong, Isle of Man, Jersey, Liechtenstein, Lithuania, Malta, Monaco, Papua New Guinea, Romania, San Marino, and Singapore.

The OECD has divided the 61 countries that will be peer reviewed into eight batches. According to the OECD, the second batch of MAP reviews, comprising Austria, France, Germany, Italy, Liechtenstein, Luxembourg and Switzerland, will be launched by April 2017.

The review of the final batch of countries will be launched by April 2019.

To contact the reporter on this story: Kevin A. Bell in Washington at kbell@bna.com

To contact the editor responsible for this story: Molly Moses at mmoses@bna.com

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