The OECD released its latest annual report on mutual agreement procedure (MAP) statistics for 2016.
The 2016 report includes data on approximately 8,000 cases from over 65 jurisdictions as of January 1, 2016-almost 25% of which were closed during 2016. According to the report, another 1,500 cases were started on or after January 1, 2016, approximately 25% of which were also closed during the year. Ending caseload inventory as at December 31, 2016 was just under 7,200 (a decrease of approximately 800 cases from the inventory as at January 1, 2016).
Of the cases covered in the report, over half are transfer pricing cases, which generally take a longer time to resolve (on average approximately 30 months). Other cases are typically resolved in approximately 17 months. The minimum standard under Action 14 of the BEPS Action Plan requires jurisdictions to seek to resolve MAP cases within an average timeframe of 24 months.
Each year, the OECD releases annual statistics on the MAP caseloads of all its member countries and of non-OECD economies that agree to provide such statistics. This annual update is part of the OECD's work to improve the timeliness of processing and completing MAP cases under tax treaties and to enhance the transparency of the MAP process.
Improving the effectiveness of dispute resolution mechanisms was the primary objective of Action 14 of the BEPS Action Plan. One of the main outcomes of the work on Action 14 is the commitment by OECD and G20 countries to a minimum standard in terms of resolving treaty-related disputes. As part of this commitment, countries have agreed to report MAP statistics, which provides a tangible way to measure the effects of the implementation of the minimum standard.
OECD MAP peer reviews
Earlier this year, the OECD published results from a series of peer reviews assessing several countries, including Canada, on how they administer the MAP article of their respective tax treaties. In particular, these reviews look at the performance of these MAP articles against an agreed minimum standard. The report found that Canada generally met most OECD minimum standards (see KPMG's GTA, "Canada Gets Passing Marks in OECD's MAP Peer Review").
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Information is current to December 05, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500