The latest peer review assessments of countries’ efforts to meet the minimum standard for tax dispute resolution, released by the OECD on July 26, report that both Argentina and South Africa fail the first prong regarding preventing tax disputes due to their lack of a bilateral advance pricing agreement (APA) program.
Chile, Colombia, Croatia, and Lithuania also failed to meet the minimum standard for preventing tax disputes, because, while they have bilateral APA programs in place, the programs do not allow roll-back of bilateral APAs.
India and Latvia were the only two countries in the latest round to meet the tax dispute standard with respect to prevention.
However, India failed to meet the minimum standard with respect to the implementation of mutual agreement procedure (MAP) agreements. The report notes that India’s competent authority cannot implement MAP agreements where an order is passed by the Income Tax Appellate Tribunal affecting an issue involved in the MAP case, and it cannot grant relief that would go below the income declared by an Indian taxpayer in its return in case of adjustments made by the Indian tax authorities.
India was also slow in closing MAP cases, taking 34 months on average – 10 over the target of 24 months. Croatia was further behind target, reporting an average closing time of 44 months. South Africa was slightly longer than target at an average of 27 months.
All the countries met at least some, if not all, the requirements under the minimum standard regarding availability of and access to MAP.
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