Mutual Agreement Procedure Steps

In the event of failure of an agreement between the competent authorities of the Member States, Legislative Decree No 49/2020 allows a person to submit a request for the establishment of an advisory committee or an alternative dispute resolution committee. If a taxpayer accepts all questions (including potential MAP issues), IE should reach agreement on all issues (including potential MAP issues) and prepare an IE report and a MAP report. If the taxpayer wishes to pay the portion of the deficit due to MAP`s problems before the final solution, this payment will be treated as an advance payment. If the taxpayer wishes to exclude MAP issues from the agreement, IE will obtain partial agreement on matters other than the MAP and prepare both an IE and MAP report. Field staff should be familiar with the revenue procedures, decisions and regulations that apply to MAP applications. To resolve tax disputes arising from conflicting positions of the Service and the United States Property Tax Authorities, the Service has entered into agreements (« Agreements ») with Puerto Rico, American Samoa, the Virgin Islands and Guam. Rev. Proc. Article 89-8 prescribes the procedures to be used to resolve problems that arise when a taxpayer is subject to inconsistent tax treatment by the service and property tax authorities.

If the MAP request is available before the MAP report is complete, a statement that IE agrees or disagrees with the facts of the MAP request, and the reason for a disagreement. If a taxpayer wishes to appeal unannounced questions (including MAP questions), EI prepares an unannounced EI report explaining the amount of the adjustment and the tax effect for all issues. After approval of the unapproved IE report and the MAP report, a 30-day letter is issued. After that, the regular procedures for reviewing the protest and forwarding the case to appeals will be followed. The European Union (EU) Arbitration Convention establishes a transfer pricing dispute settlement procedure for EU Member States. This procedure may be applicable in the case of double taxation between companies from different EU Member States. The agreements designate the International Director as responsible for the mutually agreed settlement of any dispute that may arise from the application of U.S. tax laws and their property. Such disputes may also arise without violation of the Commission (including equivalent instruments) in the event of disagreement or uncertainty as to the correct application of its provisions.

ARs should ensure that the following notification wording is included in cic`s Taxpayer Audit Plan (Coordinated Industry Case (CIC): « During the audit, adjustments to your tax liability may be recommended that result in economic double taxation due to their various affiliates operating abroad. Therefore, we recommend that you advise your foreign subsidiaries in these countries to inform the relevant tax authorities of the postponement of the expiry of the legal limitation period for refunds or other tax adjustments. This procedure should not be limited to the foreign subsidiaries listed on page 4 of this part of the audit plan. In the event that these adjustments affect the tax liability of an affiliate operating in a contracting country, you have the right to obtain from the competent authority consideration for the exemption from economic double taxation in accordance with Rev. Proc. 96-13. The procedures set out in MRI 4.60.3 also apply to U.S. possessions, except that form letter 1915P [Appendix 4.60.2–2] with Annex 1853(P)/1915(P) [Appendix 4.60.2–3] is to be replaced by model letter 1853(P). A separate timeline should be created for each U.S. property dealing with the issue. This procedure may also be used, in accordance with paragraph 3, to resolve problems related to the interpretation of agreements and for consultations aimed at eliminating cases of double taxation which are not governed by the agreements themselves. If the competent authorities have not reached an agreement within two years of the submission of the case, they shall initiate arbitration proceedings by setting up an advisory committee within six months to give its opinion on the arrangements for the elimination of double taxation.

You do not have to sign the final agreement required by tax procedure 99-32, 1999-2 C.B. 297 if you intend to request a review from the competent authority. Despite the existence of the Arbitration Convention and the subsequent adoption and revision of the relevant Code of Conduct, arbitration procedures are often lengthy and there are many unresolved cases. Under Article 8 of the Arbitration Agreement, the competent authority is not obliged to initiate the MAGP or arbitration proceedings if one of the undertakings concerned is liable to serious penalties resulting from the acts leading to the profit adjustments. You must use Rev. Proc. 99-32, 1999-2 C.B. 297 required a final agreement if you intend to ask the Director of International to conduct the mutual agreement procedure with (name of U.S. property). In view of the above-mentioned objective, several countries have put in place unilateral procedures to eliminate or reduce double taxation (i.e. unilateral downward adjustment in the event of an upward transfer pricing (TP) adjustment in another country), to be applied alternately or in conjunction with the instrument provided at the international level. Procedures used to resolve foreign-initiated adjustments that affect a U.S.

tax return or that are claimed during an audit by an American. Taxpayers are explained in IRM 4.60.2.5. As regards dispute settlement mechanisms, the main instrument currently existing at EU level is Arbitration Convention No 90/436/EC, the objective of which is to establish a procedure for the settlement of disputes arising from the practice of clearing. If a taxpayer signs a closing agreement or reaches a settlement with appellants or counsel under a final agreement or other written agreement relating to a potential matter of competent authority, the competent authority of the United States will only seek a correlative adjustment from the contracting country and will not take any action that would otherwise modify those agreements. For more information, see IRM 4.60.3, Tax Treaty Issues. Such an agreement should stipulate that the taxpayer recognizes that its rights to the review of the MAGP are therefore limited in this regard. We recently pointed out that we are proposing to recommend adjustments to your income tax for the above taxation years. These adjustments may result in double taxation under the mutual agreement procedure(s) governed by one or more U.S. agreements with [name(s) of country(ies)]. In addition, paragraph 4 allows the competent authorities to communicate directly with each other and, if necessary, to conduct a mutual consultation procedure by a specially designated Commission. Paragraph 5 provides for the possibility of initiating arbitration proceedings to ensure the effectiveness of the MAGP.

Copies of all relevant licensing agreements between US and foreign companies. For matters relating to the MAP, IE must attach to the report a statement informing the taxpayer that any protest filed must include language indicating to the appeals officer that the agreement on the WFP matters is provisional until the taxpayer accepts the decision of the competent authority. This allows taxpayers to protect their right to protest against the POPs issue at a later date. In accordance with Article 25(1) and (2) of the OECD Model, the competent authorities of the Contracting States shall endeavour to resolve, by means of a POPs, situations in which taxpayers are subject to taxation which is not in conformity with the provisions of the applicable double taxation convention. Copies of license agreements used for similar purposes. For all cases involving potential double taxation issues, a MAP report must be prepared regardless of whether a MAP request has been initiated or not. Once a taxpayer has submitted a MAP application, the field manager`s tax contract secures the relevant parts of the IE report and the thematic cartographic documents (MAP report). .