3 How MAP works
3.3. Role of the taxpayer
3.3.3. Interaction between taxpayers and competent authorities
An expeditious MAP process is beneficial to all stakeholders. Consequently, making all relevant documentation and information accessible to a competent authority, as soon as it is available, will assist in the smooth and efficient operation of the MAP process. Likewise, competent authorities ensuring that taxpayers are well aware of the status of their case will foster a more productive relationship with taxpayers and will help to avoid misunderstandings regarding the acceptance, stage of work, or completion of their case.
Co-operation among the stakeholders involved in the MAP process is crucial to a responsive and well functioning MAP program. The provision of information and assistance when requested will promote transparency and consistency. Thus, cooperation amongst these stakeholders or parties (taxpayers and competent authorities) to the MAP process is paramount.
A party’s failure to co-operate during any part of the competent authority process may have direct consequences on the length of time to obtain relief and whether such relief can ultimately be provided under the MAP. For instance, a competent authority may request additional information beyond that which was requested during an audit, or it may request information that was requested but not provided during an audit, still keeping in mind the purpose of this information is to resolve double taxation. Or perhaps a taxpayer’s request to generally review or discuss a competent authority’s position, prior to its formal discussion with the other competent authority, goes unanswered. In either of these cases, the lack of cooperation may create undue delays thereby preventing the completion of a case in a reasonable period of time.
Where the failure to provide information within a reasonable time hinders a party’s ability to perform its respective duties related to MAP in an efficient and effective manner, it may lead to disengagement, delays, or ultimately double taxation or taxation not in accordance with a tax convention.
Best Practice Nº14: Cooperation and transparency
Governments and taxpayers will benefit from a cooperative and fully transparent process. The timely provision of requested information, both from taxpayers and between competent authorities, is essential to enable competent authorities to reach an equitable and expeditious conclusion.
For taxpayers, providing the same documentation package to both competent authorities with all relevant details will go a long way in advancing the competent authorities’ common understanding of the facts.
For tax administrations, timely and frequent communication with the taxpayer regarding the status or issues of a case will increase transparency in the process and help to ensure a clearer understanding of the case usually resulting in a faster and more appropriate resolution. Whilst giving due respect to the confidentiality of government to government communications and without allowing taxpayers to become involved in the actual MAP negotiations, competent authorities are encouraged to consider obtaining input from the taxpayer on factual and legal issues that may arise in the course of the MAP.