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OECD publishes first dispute resolution peer reviews including the UK

OECD publishes first dispute resolution peer reviews

A process of peer reviews of tax authority MAP performance began in December 2016 - reports on the first batch of reviews have been published.


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Action 14 of the OECD Base Erosion and Profit Shifting (BEPS) initiative is focused on making dispute resolution more effective, which has been a key concern for business from the outset of the BEPS project. As part of this Action, the OECD established a series of peer reviews to assess the performance of participating tax authorities, in relation to administering the Mutual Agreement Procedure (MAP) article of their respective tax treaties, against an agreed minimum standard. In December 2016, reviews of the first batch of six countries (Belgium, Canada, the Netherlands, Switzerland, the UK and the US) began, and the ensuing reports have now been published. Peer reviews into a further 15 countries have already begun, with around 40 more planned over the next two years.

The minimum standard agreed by the participating countries in respect of Action 14 is designed to ensure that:

  • Treaty MAP obligations are fully implemented in good faith and MAP cases are resolved in a timely manner;
  • Administrative processes promote the prevention and timely resolution of disputes; and
  • Taxpayers who meet the requirements of paragraph 1 of Article 25 of the relevant treaty can access MAP.

The detailed elements of the minimum standard are set out in the final report on Action 14. The report also sets out some best practices designed to complement the minimum standard. 

Action 14 is critical to the success of BEPS. With domestic implementation of BEPS Actions around the world, double taxation risk has increased exponentially. Successful implementation of the Action 14 measures should ensure a culture of trust between businesses and Governments in the post-BEPS environment.

The UK peer review report, one of the six published on 26 September, acknowledges the UK’s extensive experience in resolving MAP cases and views the UK as meeting this minimum standard with some exceptions. Many exceptions will be dealt with by the BEPS Multilateral Instrument (MLI), and the UK is planning to address amending treaties not covered by the MLI. The UK will also update its MAP guidance to address a weakness identified by the peer review, making it clearer that HMRC will grant access where the taxpayer and HMRC have already entered into an audit settlement. The report also includes statistics which note a concern that attribution/allocation MAP cases currently take more than 24 months to resolve, and that the inventory of cases increased by 25 percent in 2016, suggesting a need for more resources. 

The other reports note a similar level of compliance to the UK. Particular areas to note are:

  • Whilst Belgium’s average time to resolve MAP cases is only 13 months, for attribution/allocation cases it is nearly 40 months;
  • Canada resolved a significant number of MAP cases in 2016, and its inventory of cases decreased by 10 percent;
  • The Netherlands’ average time to resolve MAP cases is reasonable overall, but over 34 months for attribution/allocation cases;
  • Switzerland’s inventory of cases has increased by 15 percent during 2016, suggesting more resources may be necessary; and
  • The US has reduced its inventory of MAP cases during 2016, although the average length of allocation/arbitration cases is 32 months. 

Whilst the compliance of the relevant countries with the OECD minimum standard is broadly positive, and should encourage taxpayers in these countries to engage with the MAP process, it is clear that the countries selected for the first batch of reviews were countries with a good reputation on MAP. In contrast we expect to see more critical reports in some future peer reviews. The good news for business is that this process is already having an impact and will, over time, improve MAP and the prospects of successfully relieving double taxation.

For further information please contact:

Peter Steeds

Paul Fields

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