Mutual Agreement Procedure

The Mutual Agreement Procedure (MAP) is tool using which tax authorities of two different governments consult and resolve disputes regarding double taxation conventions. It is an alternative procedure for dispute resolution in tax treaties of India with other countries.

Key Points

  • Under MAP, generally disputes involving cases where the same profits have been taxed in two jurisdictions – called double taxation.
  • In October 2019, the Organisation for Economic Co-operation and Development (OECD) released a report regarding the implementation of Mutual Agreement Procedure and the Base Erosion and Profit Shifting (BEPS).
  • According 2019 MAP statistics, MAP cases take a long time to resolve; on an average of 25 months. The statistics covered 105 jurisdictions and MAP cases worldwide.
  • To align with the guidelines of OECD, India has issued rules for Mutual Agreement Procedure in May 2020. Guidelines issued by CBDT provided timelines for various steps in MAP and also clarified guidelines of MAP application.
  • India has eased the dispute resolution process under MAP by bringing the time limit for resolution to 24 months.

OECD MAP 2019 Award

The OECD MAP 2019 award for highest agreement ratio for transfer pricing cases has been given to India-Japan Mutual Agreement Procedure (MAP) cooperation. Various Japanese companies do business in the manufacturing and trading sectors of India. This award shows the commitment of India for dispute resolution and providing tax certainty to Japanese firms doing business in the country. All that jurisdictions which joined the Inclusive Framework before the year 2020 were considered for these awards.

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