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OECD Releases 2017 MAP Statistics

OECD Releases 2017 MAP Statistics

New OECD report suggests that treaty related disputes are on the rise

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OECD Releases 2017 MAP Statistics

New OECD report suggests that treaty related disputes are on the rise

The OECD is reporting that the number of new global mutual agreement procedure (MAP) cases to resolve treaty-related disputes increased in 2017. Cases dealing with transfer pricing issues were up by 25%; the number of other cases increased by 50%. This information is covered by the OECD's recently released annual report on MAP statistics, which examines the 2017 year. According to the report, anecdotal evidence suggests this new case-load increase is in part due to increased taxpayer awareness of the MAP program and the large number of countries that have recently begun to focus on particular international tax risks.

The 2017 MAP statistics cover 85 jurisdictions (including Canada) and provides information on each jurisdiction, as well as aggregated global information.

Report contents
The report includes the following information on 2017's global MAP cases:

  • Timelines-Transfer pricing cases on average continue to take more time to resolve than other cases, approximately 30 months (compared to 17 months for other cases).
  • Outcomes-More than 80% of transfer pricing MAPs concluded in 2017 were resolved, as were more than 75% in the other categories of cases.
  • Approximately 65% of the transfer pricing MAP cases closed were resolved with an agreement fully eliminating double taxation and almost 15% of them were granted a unilateral relief.
  • Jurisdiction-specific reporting-The 2017 MAP statistics include a breakdown of the MAP inventory per treaty partner for each reporting jurisdiction and for each case started after 2015, including by type of case.

What about Canada?
The report announces that Canada opened 73 new transfer pricing cases in 2017 (and closed 44) and ended 2017 with an overall inventory of 90 transfer pricing cases received on or after January 1, 2016. According to the report, Canada resolved the majority of its cases by fully eliminating double taxation (or fully resolving that the taxation was not in accordance with a tax treaty). Overall, the U.S. had the largest number of transfer pricing cases, both opened and closed, with Canada.

Background
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, to help provide a tangible way to measure the effects of the implementation of the minimum standard.

For more information, contact your KPMG adviser.

Information is current to October 16, 2018. 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

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