This procedure may also be used, in accordance with paragraph 3, to resolve problems related to the interpretation of agreements and for consultations aimed at eliminating cases of double taxation which are not governed by the agreements themselves. In addition, paragraph 4 allows the competent authorities to communicate directly with each other and, if necessary, to conduct a mutual consultation procedure by a specially designated Commission. Paragraph 5 provides for the possibility of initiating arbitration proceedings to ensure the effectiveness of the MAGP. In accordance with Article 25(1) and (2) of the OECD Model, the competent authorities of the Contracting States shall endeavour to resolve, by means of a MAGP, situations in which taxpayers are subject to taxation which is not in accordance with the provisions of the applicable double taxation convention. As regards dispute settlement mechanisms, the main instrument currently existing at EU level is Arbitration Convention No 90/436/EC, the objective of which is to establish a procedure for the settlement of disputes arising from the practice of clearing. In the event of failure of an agreement between the competent authorities of the Member States, Legislative Decree No 49/2020 allows a person to submit a request for the establishment of an advisory committee or an alternative dispute resolution committee. `In any event, the mutual agreement procedure is clearly a special procedure outside national law …` Under Article 8 of the Arbitration Agreement, the competent authority is not obliged to initiate the MAGP or arbitration proceedings if one of the undertakings concerned is liable to serious penalties resulting from the acts leading to the profit adjustments. In view of the above-mentioned objective, several countries have put in place certain unilateral procedures to eliminate or reduce double taxation (i.e. unilateral downward adjustment in the event of an upward adjustment of transfer prices (TP) in another country), to be applied alternately or in conjunction with the instrument provided for at the international level. If the competent authorities have not reached an agreement within two years of the submission of the case, they shall initiate arbitration proceedings by setting up an advisory committee within six months to give its opinion on the arrangements for the elimination of double taxation. The European Union (EU) Arbitration Convention establishes a transfer pricing dispute settlement procedure for EU Member States.
This procedure may be applicable in the case of double taxation between companies from different EU Member States. Such disputes may also arise without violation of the Commission (including equivalent instruments) in the event of disagreement or uncertainty as to the correct application of its provisions. Despite the existence of the Arbitration Convention and the subsequent adoption and revision of the relevant Code of Conduct, arbitration procedures are often lengthy and there are many unresolved cases. Existing DTAs provide for the settlement of the above-mentioned international disputes by the POP. MAP adalah proses perundingan dua otoritas pajak. Sedangkan keberatan adalah sengketa Wajib Pajak dengan otoritas pajak melalui pengadilan semu. Atau melalui banding ke pengadilan pajak. Example of transfer pricing dispute settlement by map: According to the provisions, in addition to the issuance of transfer pricing and withholding taxes, MAP can also be submitted as part of the settlement: in addition, the DGT will draft and sign a MAP decree stipulating that MAP can be implemented no later than one month after receiving written notification from the authorized officials of the P3B partners. Negotiations on the MAGP will resume for a maximum period of 24 months from the date of receipt of the proposed update. (AGS) Or the situation is the other way around. The company in Indonesia has subsidiaries in Indonesia.
Foreign subsidiaries are corrected by tax authorities abroad because they are considered price transfers. The parent company in Indonesia has asked the Directorate General of Taxation to carry out a MAP with the tax authorities abroad. International practice does not limit the duration of the WFP. And that doesn`t require you to choose one. It can be simultaneous or sequential. That is, he could have been appealed to the courts, and there was a decision by the trial judge. As he is still not satisfied, he is transmitted to MAP. To solve this problem, the OECD also considers it necessary to increase the effectiveness of the settlement of international tax disputes in order to increase security and predictability for businesses. .