There are signs that the competent authorities of Brazil, Russia, and China have insufficient resources to keep up with their caseloads for resolving tax and transfer pricing disputes through mutual agreement procedure (MAP), according to peer review reports released October 18 by the OECD.
Brazil’s average time necessary to resolve MAP cases was 44 months in the most recent data, almost double the goal resolution time of 24 months. In addition, its MAP inventory has doubled in recent years. While Brazil has taken some steps to improve its MAP resolution, “further actions should be taken,” the peer review notes, and “Brazil should devote additional resources to its competent authority to handle these cases and also to be able to cope with the increase in the number of MAP cases.”
While China has been a bit timelier in resolving MAP cases, needing on average 34 months, “a number of peers experienced difficulties, in particular in timely obtaining position papers from China’s competent authority or responses to position papers issued by peers as well as earlier and more frequent communication or meetings.” Accordingly, China’s peer review also suggests that further actions be taken to resolve MAP cases in a more timely and efficient manner.
Hong Kong met the target timeline for resolving MAP disputes, settling such disputes on average with 17 months. Nonetheless, there is one peer report of difficulties in resolving MAP cases with Hong Kong due to not timely obtaining a position paper and delays in holding competent authority meetings. In light of its growing caseload, the report suggests Hong Kong should monitor whether its competent authority has the resources to keep up.
Russia was also relatively quick in resolving MAP disputes, with an average time under 15 months. However, similarly, peers expressed that they had difficulties getting timely responses from Russia’s competent authority on communications and position papers and there were also delays in receiving position papers from Russia. Accordingly, the peer review report suggests Russia should devote additional resources to its competent authority to enable it to timely submit position papers and respond to position papers and other communications.
Bulgaria, Indonesia, and Saudi Arabia were also reviewed in the latest batch of peer reviews. All three hovered close to the 24-month goal timeline for resolving disputes. However, Indonesia was flagged for its competent authority not seeking to resolve MAP cases in certain situations. Bulgaria and Saudi Arabia came up short on preventing disputes due to their lack of bilateral advance pricing agreement programs.
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