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BEPS Action 14: Make dispute resolution mechanisms more effective
P209/2015 – 23 January 2015
The Organization for Economic Cooperation and Development on 18 December 2014, released a public discussion draft pursuant to Action 14, “Make Dispute Resolution Mechanisms More Effective,” of the Action Plan on Base Erosion and Profit Shifting. The Action Plan recognizes that the actions to counter BEPS must be complemented with actions that ensure certainty and predictability for businesses, and Action 14 -- “Develop solutions to address obstacles that prevent countries from solving treaty-related disputes under [the mutual agreement procedure] MAP, including the absence of arbitration provisions in most treaties and that fact that access to MAP and arbitration may be denied in certain cases” -- an important component of this recognition, should be readily welcomed by taxpayers in the new uncertain BEPS world.
The discussion draft includes the preliminary results of the work carried out pursuant to Action 14 to identify the obstacles that prevent countries from resolving disputes under the MAP and to develop possible measures to address these obstacles. According to the discussion draft, it must be read in the broader context of the intention to introduce a three-pronged approach designed to represent a step change in the resolution of treaty-related disputes through the MAP. This three-pronged approach would (i) consist in political commitments to effectively eliminate taxation not in accordance with the OECD Model Tax Convention on Income and on Capital (such political commitments reflecting the political dimension of the BEPS project), (ii) provide new measures to improve access to the MAP and improved procedures (this discussion draft describes the envisaged measures) and (iii) establish a monitoring mechanism to check the proper implementation of the political commitment.