Transfer pricing

Annex 1 - Schematic for timeline of a typical MAP process

 

 
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Annex 1 - An ideal timeline of a typical MAP process

 

Stage

Action

 Illustrative Target Time Frame

First

Initiation of MAP by taxpayer: submission of MAP request. 

Time-limit provided for by the treaty (OECD Model Convention: 3 years from notification of action giving rise to taxation not in accordance with the convention).

 

Confirmation of the receipt of MAP request to the taxpayer and advising the other competent authority (CA) of the request.

In transfer pricing cases, the taxpayer or associated enterprise in the other country is also encouraged to contact the CA in the other country and to promptly and simultaneously provide all supporting materials.

Preliminary review of case by CA that received request.

Possible requests for additional information to taxpayer.

Within a month after initiation by taxpayer of MAP.

 

Determination of eligibility for MAP by CA that received the request.

Notification to taxpayer by that CA if the case is accepted or rejected.

(If accepted) Proposal to the other CA to start MAP discussions: issuance of opening letter to the other CA.

Within a month after the necessary information is provided to the CA that received the request.

 

Confirmation by the other CA of receipt of MAP request, preliminary screening for completeness of request and notification of decision to accept or reject request.

Within a month after the receipt of the opening letter from the CA that received the request.

  

Second

Analysis & evaluation by the CA of the country that initiated the adjustment.

Initiation of MAP consultations with other CA (if the CA of the country that initiated the adjustment is unable to arrive at a satisfactory solution on its own – i.e. provide unilateral relief – at this point): Issuance of position paper by the CA of the country that initiated the adjustment.

Ideally within 4 months, but no later than 6 months after agreement between CAs to enter into MAP consultations

 

Review of case by the other CA (the CA being asked to provide relief), preliminary screening for completeness of position paper and notification of missing information and determination whether it can provide unilateral relief to taxpayer.

Response to the position paper by other CA.

Within 6 months of receiving the position paper.

 

 Negotiation between the CAs (see  note 1) 

6 months

  

 Third

Mutual Agreement between the CAs: document the CA agreement in the form of memorandum of understanding

Within 24 months of the acceptance date of a MAP request.

 

Taxpayer’s (and other interested parties’) approval of mutual agreement. (see note 2)

To be submitted immediately after conclusion of mutual agreement.
1 month deadline to respond.

 

Confirmation of mutual agreement with terms and conditions: exchange of closing letters

As soon as possible after acceptance of mutual agreement by taxpayer (and possibly other parties).

 

Implementation of mutual agreement.

No later than 3 months after exchange of closing letters.

 

note 1: Face to face meeting(s) between the CAs can be organized in this stage, or in any other stages when necessary.    
note 2: Where the administrative-territorial subdivision’s or any local tax authorities’ consents are necessary or required.

 

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