3 How MAP works
3.2. Acceptability of a MAP request
3.2.4. Other potential barriers to MAP
There are sometimes other issues that some competent authorities have decided not to consider in MAP, notwithstanding the obligation under the MAP article to consider all “justified” objections of the taxpayer to taxation not in accordance with the convention. As an example, some competent authorities may not provide relief in the form of a notional expense for a notional income adjustment raised by a treaty partner. Other competent authorities may decline to engage in MAP if a taxpayer’s situation presents an issue on which their tax administrations wish to obtain a judicial precedent. These types of exceptions to the availability of MAP tend to undermine the spirit and purpose of the MAP process. The recognised general principle of international law is that domestic law, even domestic constitutional law, does not justify a failure to meet treaty obligations. It follows that countries should not, without due deliberation, take the view that a matter is not eligible for MAP consideration.
Best Practice Nº12: Countries eliminate or minimize “exceptions” to MAP
It would be considered in the best interest of all stakeholders and would better reflect the spirit and purpose of the tax conventions for countries to rectify inconsistencies between domestic laws or policies and their network of tax conventions by eliminating issues that they exclude from MAP considerations. At the very least, these countries should publicise the exclusion so that taxpayers and other tax administrations are aware of the MAP exceptions.
A competent authority relying upon a domestic law impediment as the reason for not allowing a MAP to be initiated by a taxpayer should inform the other competent authority of this and duly explain the legal basis of its position.