Philippines: Guidance for taxpayers seeking MAP assistance

Revenue regulations (RR) No. 10-2022 sets forth the guidelines and procedures for taxpayers to apply in requesting mutual agreement procedure (MAP) assistance from the designated competent authority for the Philippines, to resolve disputes arising from application of an income tax treaty.

The following items are specified in RR No. 10-2022 [PDF 1.1 MB]:

• Typical scenarios of taxation that are not in accordance with an income tax treaty requiring MAP assistance
• Composition of the MAP team
• Procedures for initiating a MAP request including pre-filing consultation, what a valid MAP request is, and the specific information and documentation to be submitted with the MAP application
• Processing of a MAP request, pursuant to the follow steps:
  • Preliminary assessment (if all requisites are met to be considered a valid MAP request)
  • Analysis of a MAP case (to determine whether the taxpayer’s objection/claim is justified and whether the Philippine competent authority can resolve it unilaterally or not)
  • Consultations between the MAP team and other offices of the Bureau of Internal Revenue (BIR) that rendered the tax assessment or ruling
  • Consultations between the competent authorities (to resolve the case with the competent authority of the other contracting state, in case the taxpayer’s claim is justified and cannot be resolved unilaterally by the Philippine competent authority)
  • Negotiation of bilateral or multilateral advance pricing arrangements (APAs) through the MAP process
  • Authority of the MAP team (to resolve MAP cases in accordance with the terms of the applicable income tax treaty to eliminate taxation and not in accordance with a provision thereof—without approval or discretion of the examiner who made any transfer pricing adjustments at issue)
  • Resolution of a MAP case (including possible outcomes of the MAP process within an average timeframe of 24 months from receipt of complete MAP request, depending on the complexity of the case and cooperation of the taxpayer and of the competent authorities)
  • Competent authority agreement reached (if any)
  • Timely implementation of MAP agreements
  • No competent authority agreement reached (requires notification from the Philippine competent authority to the taxpayer within 30 days from consultation or meeting citing the reasons for the competent authorities not being able to reach an agreement)
  • Interaction with domestic remedies
  • Withdrawal of a MAP case
  • Appropriate transfer pricing adjustment under the income tax treaties
• Audit settlements reached between the tax authority and the taxpayers do not preclude access to MAP
• The information and documents submitted in support of the MAP request are to be treated with utmost confidentiality and are only to be used and disclosed in accordance with the provisions of the relevant income tax treaty

A second guidance item (RR No. 11-2022) prescribes the guidelines and procedures for the spontaneous exchange of certain taxpayer-specific rulings including cross-border unilateral APAs and any other cross-border unilateral tax ruling covering transfer pricing or the application of transfer pricing principles, and cross-border rulings providing a unilateral downward adjustment to the taxpayer’s taxable profits in the country issuing the ruling.

Read an August 2022 report prepared by the KPMG member firm in the Philippines