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. Furthermore, country data shows a decrease of inventory in about half of the reporting jurisdictions and an increase in the other half.

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, with 79 jurisdictions to be reviewed over a period from 2016 to 2021. The process consists of two stages. In stage 1, jurisdictions’ implementation of the Action 14 Minimum Standard is evaluated and recommendations are made where jurisdictions have to improve in order to be fully compliant with the requirements under this standard. The follow-up of the recommendations is measured in stage 2 of the process.

What are the results so far?

For the 45 jurisdictions reviewed thus far, around 990 recommendations have been issued, including recommendations for jurisdictions to maintain compliance with certain elements of the minimum standard. At the same time, the BEPS Action 14 Minimum Standard is already having a broader impact on MAP worldwide:

  • There has been a marked increase in the number of cases dealt with by competent authorities.
  • 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.
  • The number of Inclusive Framework MAP profiles published on the OECD website continues to increase. In addition, many jurisdictions introduced 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 already begun. The reports for the six jurisdictions that were peer reviewed in batch 1 have already been discussed and approved by the FTA MAP Forum with other stage 2 reports scheduled to be published through 2021.

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Action specific content

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Peer review and monitoring process

In October 2016, the OECD released 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 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 peer review process is conducted in two stages. Stage 1 assesses countries against the terms of reference of the minimum standard according to an agreed schedule of review. Stage 2 focuses on monitoring the follow-up of any recommendations resulting from jurisdictions' stage 1 peer review report.

Schedule of reviews

Stage 1 peer review reports

Stage 2 peer review reports

The peer review reports for Stage 2, as well as the optional reports on the adoption of best practices, if chosen by the assessed jurisdiction, can be accessed here: