OECD plan to assess countries’ tax treaty MAP programs approved by BEPS “inclusive framework”

OECD has today released documents that establish a peer review and monitoring process to measure countries’ compliance with the minimum standards for resolving tax treaty disputes, set out in the OECD/G20 base erosion profit shifting (BEPS) plan.

Countries that have joined the BEPS “inclusive framework” will be assessed under the program. These countries approved the documents and process, the OECD said.

So far, 84 countries have joined the BEPS inclusive framework, including 40 non-OECD, non-G20 countries. The countries have committed to implement the BEPS minimum standards, including the standards on tax treaty dispute resolution, and to ensure that the standards are implemented.

The group agreed to terms of reference that transform the BEPS minimum standards on dispute resolution into 21 items, covering (1) prevention of tax treaty disputes, (2) availability and access the to the mutual agreement program (MAP) for resolving tax treaty disputes, (3) resolution of MAP cases, and (4) implementation of MAP agreements.

Countries will be judged, in stage 1 of the peer review process, based upon whether they have the legal framework to apply the standards and whether actually apply the standards. In stage 2 they will be assessed based on whether they addressed any shortcomings identified in stage 1. To aid the process, taxpayers will be asked to comment on their experiences with the countries’ MAP programs for tax treaty dispute resolution.

The documents also identify 12 best practices for tax treaty dispute resolution under MAP, which were not included in the agreed-to BEPS plan but were are added to the review. Adherence to these standards will not affect a country’s ranking.

The methodology also allows developing countries to defer the peer review, on account of capacity constraints and a low volume of MAP cases.

Stage 1 peer reviews are slated to begin in 2016

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