Peer Review of MAP Regimes Starts This Year

The Tax Management Transfer Pricing Report ™ provides news and analysis on U.S. and international governments’ tax policies regarding intercompany transfer pricing. 

By Kevin A. Bell

June 8 — The OECD's Forum on Mutual Agreement Procedures will start its “peer review regime” of how countries handle mutual agreement procedure cases this year, a senior IRS official said.

Some countries participating in this work will be first in line, said John Hughes, a senior adviser in the Internal Revenue Service's Transfer Pricing Operations unit. “I can assure you that the United States will be first in line.”

That is a mandate from IRS Commissioner John Koskinen and Douglas O'Donnell, commissioner of the IRS Large Business and International Division, Hughes said. “We see Action 14 as being such a key integral component of the BEPS work, and the United States wants to be a leader in the effective and meaningful implementation of Action 14.”

BEPS Action 14

BEPS Action 14, the only action item championed by multinational companies, seeks to make dispute resolution mechanisms more effective. In the final Oct. 5 report on Action 14, countries agreed to ensure that treaty obligations related to MAP procedures should be fully implemented in good faith, and that MAP cases should be resolved in a timely manner (24 Transfer Pricing Report 754, 10/15/15).

Tax Commissioners from 44 countries, including the U.S., are members of the Organization for Economic Cooperation and Development's Forum on Mutual Agreement Procedures.

Hughes said the details of the peer review package will be forthcoming in the second half of 2016. “The United States is keen to be right at the front as to what it means to try and meaningfully improve dispute resolution” recognizing that the number of MAP cases in increasing.

Taxpayer Input Crucial

Hughes said taxpayer input for the peer review process is critical. “The exact manner of how the input will be solicited is yet to be determined.” Competent authorities don't have visibility into when taxpayers may be denied access to MAP, he said.

The U.S. has been pushing for robust taxpayer input, Hughes said. However, some other countries have a different view.

Hughes said when the countries were finalizing the language of BEPS Action 14 last summer, “the issue of MAP access was front and center, and the U.S. was very vigorous in pressing the other BEPS delegates to recognize the importance of access to MAP.”

Hughes spoke at an international tax conference sponsored by Bloomberg BNA and Baker & McKenzie LLP.

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