Action 14: Dispute Resolution – Mutual Agreement Procedure (MAP)
The Action 14 minimum standard aims to strengthen the effectiveness and efficiency of the Mutual Agreement Process (MAP) contained within Double Taxation Treaties.
The Isle of Man has committed to take specific measures contained within the minimum standard to ensure that treaty-related disputes are resolved in a timely, effective and efficient manner, and in line with the best practices recommended in the OECD report 'Making Dispute Resolution Mechanisms More Effective, Action 14 - 2015 Final Report'.
The specific measures of the minimum standard are set out in the 2015 Final Report.
Paragraphs 5 and 6 of this 2015 Final Report provide the following explanation of the rationale for MAP:
"Removing obstacles that double taxation presents is key to the development of economic relations between jurisdictions. In this regard, jurisdictions enter into tax treaties with the aim of removing such obstacles and to provide taxpayers with certainty on the tax treatment of their cross border trade, investment and activities.
Where doubts or difficulties arise in relation to the interpretation or application of the tax treaty, or where taxpayers enter into disputes with tax authorities on the tax treaty treatment of their activities, Article 25 of the OECD Model Tax Convention on Income and on Capital ("OECD Model Tax Convention"), provides a mechanism – the mutual agreement procedure ("MAP") - that allows the resolution of such difficulties or disputes.
The MAP, which is independent from the ordinary legal remedies available under domestic law, allows the competent authorities of the Contracting Parties to resolve differences or difficulties regarding the interpretation or application of the Convention on a mutually-agreed basis. This mechanism seeks to ensure the proper application and interpretation of tax treaties so that taxpayers entitled to the benefits of the treaty are not subject to taxation by either of the Contracting Parties which is not in accordance with the terms of the treaty."
The Isle of Man has a number of Double Tax Treaties, many of which contain specific MAP articles.
Further guidance on the implementation of the Action 14 minimum standards and MAP in the Isle of Man is available in Guidance Note 57 - Mutual Agreement Procedure in the Isle of Man’s Double Taxation Agreements