Action 14 Mutual Agreement Procedure

Minimum Standard

The BEPS Action 14 Minimum Standard seeks to improve the resolution of tax-related disputes between jurisdictions. Inclusive Framework jurisdictions have committed to have their compliance with the minimum standard reviewed and monitored by its peers through a robust peer review process that seeks to increase efficiencies and improve the timeliness of the resolution of double taxation disputes.

Action overview

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What is the issue?

As cross-border business and international labour mobility continues to be commonplace in a 21st century global economy, disputes relating to which jurisdictions can tax what types of income inevitably arise on occasion.

Many tax treaties between jurisdictions contain a MAP provision providing for a process used to resolve such disputes. Article 25 of the OECD Model Tax Convention provides a mechanism, independent from the ordinary legal remedies available under domestic law, through which the competent authorities of the Contracting States may resolve differences or difficulties regarding the interpretation or application of the Convention on a mutually-agreed basis. This mechanism – the mutual agreement procedure – is of fundamental importance to the proper application and interpretation of tax treaties, notably to ensure that taxpayers entitled to the benefits of the treaty are not subject to taxation by either of the Contracting States which is not in accordance with the terms of the treaty.

Despite the widespread existence of this provision in tax treaties, further effort is needed to ensure that access to MAP is available and that MAP cases are resolved within a reasonable timeframe and implemented quickly.

Why does it matter?

As novel challenges relating to international taxation surface, the necessity of having robust dispute resolution processes in place becomes increasingly apparent.

Recent statistics show that tax administrations are closing more cases than ever before. However, new MAP cases as from 2016 are increasing significantly, thus putting upward pressure on countries' MAP inventories. Therefore, the total inventory of MAP cases keeps increasing every year since the number of cases closed has not been able to keep up with the number of new cases.

While anecdotal evidence suggests that the increase in new cases is due to a range of factors, it is clear that facilitating the effectiveness and efficiency of MAP between countries is necessary in order to resolve such cases in a timely manner.

What are we doing to solve it?

The final report on Action 14: Making Dispute Resolution Mechanisms More Effective, which contains a BEPS minimum standard, was adopted in October 2015. The Action 14 Minimum Standard consists of 21 elements and 12 best practices, which assess a jurisdiction’s legal and administrative framework in the following four key areas:

  1. preventing disputes;
  2. availability and access to MAP;
  3. resolution of MAP cases;
  4. implementation of MAP agreements.

Along with the adoption of this minimum standard, the BEPS Inclusive Framework members agreed on:

The Action 14 peer review process was launched at the end of 2016. The initial peer review process consisted of two stages, where 82 jurisdictions were reviewed. In stage 1, jurisdictions’ implementation of the Action 14 Minimum Standard was evaluated and recommendations were made where jurisdictions have to improve in order to be fully compliant with the requirements under this standard. The follow-up of the recommendations was measured in stage 2 of the process. Following the conclusion of the initial peer review process in 2022, a continued monitoring process has started whereby all Inclusive Framework member jurisdictions will be subject to continued monitoring: jurisdictions that have "meaningful MAP experience" would undergo a full peer review process from 2024 once every four years and those that do not would undergo a two-stage simplified peer review process from 2023.


What are the results so far?

Initital peer review process

In February 2021, the final batch of Action 14 stage 1 mutual agreement procedures (MAP) peer review reports were published. Of the more than 1750 recommendations made, about 66% (+/- 1150) relate to deficiencies in tax treaties with respect to the MAP article. Around 34% (+/- 600) of the recommendations relate to MAP practices and policies that are not in line with the minimum standard. In addition, there are almost 400 recommendations for jurisdictions to continue practices that were already in line with the minimum standard.

The Action 14 minimum standard has had a broader impact on MAP and tax certainty more broadly, and many countries are working to address deficiencies identified in their respective reports. For example:

  • The peer review process has spurred on changes regarding the structure and organisation of competent authorities to streamline better their processes for resolving MAP cases in a timely manner.
  • There has been a significant increase in the number of closed cases in almost all jurisdictions under review. This is likely the result of an increase in resources or of a more efficient use of resources by competent authorities due to (or in anticipation of) the peer review process.
  • The number of Inclusive Framework MAP profiles continues to increase, and now covers over 100 jurisdictions. This central repository of easily accessible information for taxpayers will facilitate their use of MAP.
  • An increasing number of jurisdictions have introduced or updated comprehensive MAP guidance to provide taxpayers with clear rules and guidelines on MAP.
  • Access to MAP is now granted for transfer pricing cases even where the treaty does not contain Article 9(2) of the OECD Model Tax Convention, especially in those jurisdictions that did not provide access to MAP in such cases in the past.

In addition to these broader changes, the monitoring process under stage 2 has now been completed. Stage 2 reports for the 82 jurisdictions that were peer reviewed in batches 1-10 have been published from August 2019 until September 2022. These stage 2 reports offer a first glimpse into how well jurisdictions are implementing the specific recommendations issued to them during stage 1 of the peer review process.

The results of this stage 2 monitoring process show that jurisdictions are making tangible progress. For the 82 jurisdictions reviewed in stage 2, many have improved their performance with respect to the prevention of disputes, the availability of and access to MAP, the resolution of MAP cases and the implementation of MAP agreements. This progress is also reflected in the developments set out below:

  • In addition to bilateral treaty changes, the MLI was signed and ratified by most of the jurisdictions, which brings a substantial number of their treaties in line with the standard.
  • Almost all jurisdictions have either introduced or updated publicly available MAP guidance to provide more clarity and details to taxpayers.
  • Most of the jurisdictions decreased the amount of time needed to close MAP cases and a majority of these jurisdictions met or were close to the sought-after 24-month average timeframe to close MAP cases.
  • Following legislative or policy-related changes or the impact of the Multilateral Instrument since stage 1, several of these jurisdictions are now able to implement MAP agreements notwithstanding their domestic time limits.

There is still work to be done to bring the tax treaties of reviewed jurisdictions in line with the Action 14 minimum standard. Many of the assessed jurisdictions have, however, made substantial progress in updating their treaty networks, including through the prioritisation of tax treaty negotiations when treaties are not expected to be modified by the MLI.


Continued monitoring

Results from the continued monitoring process described above will be made available once the first batch of peer review reports are published.

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Peer review and monitoring process

In January 2023, the OECD released updated key documents, approved by the Inclusive Framework on BEPS, that form the basis of the MAP peer review and monitoring process under Action 14 of the BEPS Action Plan. The key documents previously released in October 2016 are still available here. The peer review and monitoring process is conducted by the Forum on Tax Administration MAP Forum in accordance with the Terms of Reference and Assessment Methodology, with all members participating on an equal footing.

The initial peer review process was conducted in two stages, where 82 jurisdictions were reviewed. Stage 1 assessed countries against the terms of reference of the minimum standard according to an agreed schedule of review. Stage 2 focused on monitoring the follow-up of any recommendations resulting from jurisdictions' stage 1 peer review report. Following the conclusion of the initial peer review process in 2022, a continued monitoring process has started whereby all Inclusive Framework member jurisdictions will be subject to monitoring as follows:

  • Simplified peer review process: Jurisdictions that are considered to not have “meaningful MAP experience” would undergo a simplified review of their MAP framework based on the Action 14 minimum standard, with the aim of assisting them in setting up a more robust MAP programme for future MAP cases. This process starts from January 2023 onwards.
  • Full peer review process: Jurisdictions that are considered to have “meaningful MAP experience” would go through full peer reviews under the Action 14 minimum standard. This process will start from January 2024 onwards, with each qualifying jurisdiction being reviewed once every four years. The assessment schedule for the full peer review process will be released by the end of 2023.

A jurisdiction would be considered to have "meaningful MAP experience" if:

  • it has ten MAP cases in its MAP end inventory as reported in its MAP Statistics over the three previous years on average; or
  • feedback is received from other members of the FTA MAP Forum indicating that the jurisdiction’s policy or practice concerning MAP requires improvement.

Taxpayers that have input to provide with respect to their interactions with a competent authority in connection with MAP cases can approach the other competent authority concerned with such input, detailing either positive experiences or difficulties faced. The competent authority that is approached by a taxpayer will consider whether to include the input provided by the taxpayer in its peer input with respect to an assessed jurisdiction where it considers this relevant, which would be taken into account in the simplified peer review process or the full peer review process, as appropriate for that jurisdiction.

Schedule of reviews

Stage 1 peer review reports

Stage 2 peer review reports