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Dispute resolution

2020 Mutual Agreement Procedure Awards

 

On the occasion of Tax Certainty Day 2021, where a full range of tax certainty tools were discussed, the OECD released the 2020 MAP Statistics and the winners of the 2020 MAP awards:

Note: The winners for all categories have been determined by taking into account the time necessary and the outcomes reached in MAP by the jurisdictions concerned as well.

 

CATEGORY 1 - AVERAGE TIME TO CLOSE MAP CASES

Award 1: Transfer pricing cases

  • Methodology: Shortest average time to close MAP cases, in months
  • Type of cases: Transfer pricing cases, received before or after 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)*
  • Size: Jurisdictions that closed more than 50 transfer pricing cases in 2020
  • Winner: Switzerland with approximately 20 months.

 

Award 2: Other cases

  • Methodology: Shortest average time to close MAP cases, in months
  • Type of cases: Other cases, received before or after 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)*
  • Size: Jurisdictions that closed more than 20 other cases in 2020
  • Winner: Australia with approximately 6 months.

 

CATEGORY 2 - AGE OF INVENTORY

Award 3

  • Methodology: Smallest portion of cases received before 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)* in end inventory, in %
  • Type of cases: Both transfer pricing cases and other cases
  • Size: Jurisdictions with more than 100 cases left in 2020 end inventory
  • Winner: Spain with approximately 5.6%.

 

CATEGORY 3 - CASELOAD MANAGEMENT

Award 4: Large Inventory

  • Methodology: Highest closing ratio in %** taking into account case outcomes
  • Type of cases: Both transfer pricing cases and other cases, received before or after 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)*
  • Size: Jurisdictions with more than 100 cases left in 2020 end inventory
  • Winner: Luxembourg with approximately 68%

 

Award 5: Medium Inventory

  • Methodology: Highest closing ratio in %** taking into account case outcomes
  • Type of cases: Both transfer pricing cases and other cases, received before or after 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)*
  • Size: Jurisdictions with more than 20 cases but fewer than 100 cases left in 2020 end inventory
  • Winner: Norway with approximately 61%.

 

CATEGORY 4 - CO-OPERATION

Award 6: Transfer pricing cases

  • Methodology: Most number of MAP cases fully resolved through agreement by a pair of jurisdictions as compared to their total MAP caseload as determined by the agreement score***
  • Type of cases: Transfer pricing cases received after 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)*
  • Size: Pairs of jurisdictions with more than 20 transfer pricing cases pending in 2020 (start inventory + cases started)
  • Winners: Italy with Spain with an agreement score of approximately 60 points.

 

Award 7: Other cases

  • Methodology: Most number of MAP cases fully resolved through agreement by a pair of jurisdictions as compared to their total MAP caseload as determined by the agreement score***
  • Type of cases: Other cases received after 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)*
  • Size: Pairs of jurisdictions with more than 20 other MAP cases pending in 2020 (start inventory + cases started)
  • Winners: Norway with Sweden with an agreement score of approximately 153 points.

 

CATEGORY 5 – MOST IMPROVED JURISDICTION (NEW)

Award 8

  • Methodology: Greatest increase in number of cases closed with unilateral relief or full agreement (2020 vs 2019), with an increase for both transfer pricing and other cases
  • Type of cases: Both transfer pricing cases and other cases, received before or after 1 January 2016 (or 1 January of the year of joining the BEPS Inclusive Framework)*
  • Size: All jurisdictions
  • Winner: Ireland with an increase by 27 cases closed with unilateral relief or full agreement in 2020 compared to 2019 (+ 5 for transfer pricing cases and + 22 for other cases).

 

* New cases (cases received on or after 1 January 2016 or 1 January of the year of joining the BEPS Inclusive Framework) are counted using an agreed methodology that uses a common start date. Old cases (cases received prior to 1 January 2016 or 1 January of the year of joining the BEPS Inclusive Framework) are counted based on each reporting jurisdictions’ own methodology without a jurisdiction-by-jurisdiction breakdown and the possibility of reconciliation.

** The closing ratio measures the number of MAP cases closed by each jurisdiction during the reporting year as compared its total MAP caseload. This is calculated by taking the percentage of the number of MAP cases closed during the year over the sum of (i) the number of MAP cases in inventory at the beginning of the year and (ii) half of the number of MAP cases that started during the year. The number of MAP cases started during the reporting year is halved in this ratio as some of the MAP cases started may have started towards the end of the year, making it unreasonable to expect jurisdictions to have closed such cases. This adjustment also explains that the ‘closing ratio’ may be higher than 100% for some jurisdictions.

*** The agreement score measures the number of MAP cases fully resolved in the bilateral phase by the pair of jurisdictions as compared to their total MAP caseload. The score is calculated by comparing (i) the number of MAP cases fully resolved in the bilateral phase with an agreement, either fully eliminating the double taxation or fully resolving the taxation not in accordance with the tax treaty by the pair of jurisdictions with (ii) the sum of the number of MAP cases in inventory at the beginning of the year and half of the number of MAP cases that started during the year. The number of MAP cases started during the reporting year is halved in this computation as some of the MAP cases started may have started towards the end of the year, making it unreasonable to expect jurisdictions to have closed such cases. For instance, a pair of jurisdictions that has 10 cases in their start inventory, 20 cases that start during the year, and that close 10 of them with an agreement, either fully eliminating the double taxation or fully resolving the taxation not in accordance with the tax treaty would have a score of 50 points. The agreement score can be up to 200 points, in very rare circumstances.

 

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