DTAA: CBDT publishes standards for alternative tax dispute resolution mechanism



The Central Council of Direct Taxes (CBDT) has issued comprehensive guidelines on the Mutual Acceptance Procedure (MAP) for the benefit of taxpayers, tax practitioners, tax authorities, chartered accountants of India and treaty partners.

This 17-page guide follows the recommendations of the Action 14 final report of the Base Erosion and Profit Sharing (BEPS) project in OECD and G20 countries. This report recommended that all countries that implement the BEPS package publish comprehensive MAP guidance.

Mutual Agreement Procedure (MAP) is an alternative tax dispute resolution mechanism available to taxpayers under Double Tax Avoidance Agreements (DTAA) to resolve disputes giving rise to double or non-compliant taxation. DTAA. The MAP can help alleviate double taxation in whole or in part.

Almost all DTAA entered into by India have Article MAP and it provides additional dispute resolution mechanism for taxpayers in addition to those available under national laws of India. A taxpayer can request assistance under the MAP regardless of remedies under Indian domestic law.

The MAP enables Competent Authorities (CAs) of India to engage with CAs of other treaty partners and is a process that facilitates discussions and negotiations between the two treaty partners as they strive to resolve international tax disputes, which do not comply with the relevant DTAA. At present, India has two CAs for PAD cases and they are senior officials from the Revenue Department of the Ministry of Finance. The two Indian CAs are independent from the tax authorities which monitor taxpayers and make their own decisions.

Meanwhile, the CBDT has clarified in the MAP guidance that if any element of these guidance conflicts with national legislation, rules, regulations, instructions and circulars in India or with DTAA entered into by India , the provisions of national legislation, circulars and regulations, as the case may be, shall prevail.



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