OECD: BEPS tax dispute resolution mechanisms | KPMG | US

OECD: First reviews, implementation of BEPS tax dispute resolution mechanisms

OECD: BEPS tax dispute resolution mechanisms

The Organisation for Economic Cooperation and Development (OECD) today announced the release of the first “peer reviews”—analysis of efforts by Belgium, Canada, the Netherlands, Switzerland, the United Kingdom, and the United States—on implementation of the base erosion and profit shifting (BEPS) minimum standards for improving tax dispute resolution mechanisms.

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As reported in today’s OECD release, there are six peer review reports that represent the first evaluation of how countries are implementing new minimum standards agreed under the BEPS project. A focus has been on improving the mutual agreement procedure (MAP), that has resulted in a new minimum standard for tax treaty-related disputes to be resolved in a timely, effective and efficient manner (Action 14). This minimum standard is complemented by a set of best practices. In addition to implementing the Action 14 minimum standard, countries have committed to have their compliance with this standard reviewed and monitored by their peers.

The six reports include over 110 recommendations relating to the minimum standard. In the second stage of the peer review process, each jurisdiction’s efforts to address any shortcomings identified in its first stage peer review report will be monitored. The OECD release reports that the six countries “performed well” in various MAP areas: 

  • All countries provide for roll-back of bilateral advance pricing agreements (APAs) with a view to preventing disputes from arising
  • MAP is available and access to MAP is granted in the situations required by the minimum standard
  • The competent authority function is adequately resourced, and takes a pragmatic and principled approach for the resolution of MAP cases
  • MAP agreements reached so far have been implemented on time 

 

The OECD noted areas for improvements include: 

  • Resolution of MAP cases within the pursued average of 24 months is a challenge for some jurisdictions, especially concerning transfer pricing cases.
  • MAP guidance is generally clear and accessible, however, improvements for some jurisdictions are necessary and already under way.
  • Each of the six jurisdictions was given recommendations to align their tax treaty MAP provisions with the BEPS Action 14 minimum standard. For a number of those treaties, such alignment will already be realised via the multilateral convention to implement tax treaty-related measures to prevent BEPS.
  • The six jurisdictions are reportedly at work to address deficiencies identified in their respective reports. 

 

Read an October 2017 report [PDF 77 KB] prepared by the KPMG member firm in Canada

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