As global trade and investment increase, the possibility of cross-border tax disputes necessarily increases as well. Left unresolved, these disputes can result in double taxation and a corresponding impediment to international trade in a global economy. Both governments and business need effective procedures to keep such disputes to a minimum and to resolve them satisfactorily when they arise.

The OECD in February 2007 completed a major project to improve the effectiveness of the Mutual Agreement Procedure (MAP) of Article 25 of the OECD Model Tax Convention and issued its final report, Improving the Resolution of Tax Treaty Disputes. This work focused on resolving all kinds of cross border tax treaty disputes, including transfer pricing disputes, where they arise.

The MAP Procedure provided in tax treaties that follow the OECD Model Tax Convention has been the traditional mechanism to resolve these disputes. The MAP has worked reasonably well in the past, but both the number of cross-border disputes as well as the complexity of the cases involved have increased. Improving the effectiveness of the operation of the MAP and, equally importantly, ensuring that the cases involved in the MAP process will come to a satisfactory conclusion was the focus of this project at the OECD.

The OECD's Committee on Fiscal Affairs formed a Working Group to examine ways of improving the effectiveness of the MAP, including the consideration of other dispute resolution techniques which might be used to supplement the operation of the MAP.
Business being a major stakeholder in the MAP process, the Working Group held consultations with the business community in Paris (2003), Washington (2005) and Tokyo (2006).

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