Comments Atlas Tax Lawyers on the OECD Public Consultation Document regarding BEPS Action 14

Last week Atlas Tax Lawyers provided its comments on the OECD Consultation Document (the “Consultation Document”) regarding BEPS Action 14.

Our core message

We consider that real effectiveness of Mutual Agreement Procedures (“MAP”) can only be assured in combination with Mandatory and Binding Arbitration (“MBA”). Having said this, we strongly support the proposals made by the OECD to further strengthen the effectiveness of MAP.

What is the purpose of the Consultation Document?

The Consultation Document accommodates the review of the BEPS Action 14 report, published on 5 October 2015. The BEPS Action 14 report introduced the Minimum Standard, which is aimed at improving the resolution of tax-related disputes between jurisdictions by means of MAP. The Consultation Document contains several proposals to further strengthen the Minimum Standard and the effectiveness of dispute resolution by means of MAP. 

Why did we provide our input?

Double taxation distorts investments decisions. This is an issue for businesses operating internationally as well as jurisdictions. In recent years, the number of MAP increased exponentially and we anticipate that this exponential growth will further increase in the foreseeable future due to:

• an increase in taxpayer transparency (i.e. following the Country-by-Country reporting obligations, Master File and Local File documentation, the exchange of rulings, i.e. within an EU context and the EU DAC6);
• the shift towards (more subjective) economic notions as reflected in BEPS measures (i.e. BEPS Action 7 on permanent establishments and BEPS Action 8-10 on risk-allocation and intangibles); and
• the increase of highly digitized businesses that are able to operate in market jurisdictions with little nexus.

For more details on our recommendations we refer you to our report.