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OECD discussion draft on Action 14 of the BEPS Action Plan
On 18 December 2014, the OECD published a discussion draft on Action 14 (make dispute resolution mechanisms more effective) of the BEPS Action Plan. The Action Plan recognises that the actions to counter BEPS must be complemented with actions that ensure certainty and predictability for business. Work to improve the effectiveness of the mutual agreement procedure (MAP) in resolving treaty-related disputes is therefore an important component of the work on BEPS issues. Taxand is honoured to provide combined feedback from around the world on the OECD discussion draft with respect to Action 14 (make dispute resolution mechanisms more effective) of the BEPS Action Plan.
Action 14 of the BEPS Action Plan concerns the development of solutions to address obstacles that prevent countries from solving treaty-related disputes under MAP, including the absence of arbitration provisions in most treaties and the fact that access to MAP and arbitration may be denied in certain cases.
In Taxand's experience, when executed well, MAP can be a very effective tool to obtaining greater certainty in the otherwise uncertain area of international tax, in particular with respect to transfer pricing. Whether in the context of a bilateral, or multilateral, Advance Pricing Agreement (APA), or a case that originates through a tax audit adjustment, a MAP that is supported by many of the key principles noted in the discussion draft generally leads to a more satisfying experience for taxpayer and tax authority alike.
Taxand is honoured to provide written comments to assist the OECD in their work on Action 14 based the practical experience we have as tax advisors and transfer pricing specialists.
The work done in the area of improving the effectiveness of resolving disputes under MAP is of great importance. As the economy continues its rapid globalisation and tax authorities around the world take action to counter BEPS, the number of treaty-based tax disputes can be expected to rise. Taxand, therefore, agrees it is critical to ensure proper access to MAP and the efficient handling of cases that are brought forward.