Dispute resolution

2004 Discussion Draft: Proposals for Improving Mechanisms for the Resolution of Tax Treaty Disputes


2004 Progress Report

In the summer of 2004 the Working Group produced a Draft Progress Report that describes three different kinds of proposals for improving dispute resolution: current proposals, proposals for future work, and proposals for future study.


The issues which have been considered by the Working Group and that are discussed in the Draft Progress Report follow, in a broadly chronological sequence, the various steps in the MAP process. The work covers both operational issues and substantive issues. Operational issues include topics such as:

  • the transparency of the procedures;
  • the role of the taxpayer in the process;
  • the cost of the process; establishing a timeframe for settlement, etc.

Substantive issues include:

  • the scope and purpose of Article 25;
  • the interaction between MAP and domestic law;
  • constraints on the ability to use or implement the MAP;
  • time limits;
  • suspension of tax and interest, etc.

Selected issues are analyzed in detail and proposals are made for improvements in the dispute resolution process. One of the most important proposals is likely to be the development of an online Manual on Effective Mutual Agreement (MEMAP) for both tax administrations and taxpayers.


Attention is also being focused on ways to ensure that the MAP process will reach a satisfactory conclusion and that the conclusion is reached within a reasonable timeframe. Under the existing MAP, if after the end of discussions, the countries involved in a dispute cannot agree, the dispute remains unresolved and can result in unrelieved double taxation. Further even if the case is agreed, the procedure can sometimes take a long time and use a lot of taxpayer and tax administration resources. Such results are unsatisfactory to all concerned. A number of supplementary techniques are therefore being considered to deal with such situations, ranging from an advisory opinion to a more formal arbitration process.


The Working Group is currently analysing the feasibility of implementing the mandatory resolution of unresolved MAP cases for use only by countries that wished to provide for binding resolution of all cases. Such a possibility would constitute a mandatory submission but also acceptance in advance of the result.  This would involve the development of the text of a new Model Tax Convention Article and attendant Commentary.


The work on supplementary dispute resolution has evolved and although no final decision has been reached on the current proposals, there is considerable support for arbitration with mandatory resolution.


The Draft Progress Report was released in summer of 2004 for public comment. The Working Group held meetings in June and December 2005 and met again in March 2006.


For further information please contact Edward Barret (Tax Treaty Advisor, e-mail: or Mary Bennett (Head, Tax Treaty, Transfer Pricing and Financial Transactions Division, e-mail:


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