Transfer Pricing in Canada, the United States and around the World

Transfer Pricing  in Canada, the United States and around the World

OECD MAP Peer Review Report for the United States

Within the work on BEPS action 14 Make Dispute Resolution Mechanisms More Effective, the OECD recently released the MAP Peer Review Report for the United States.

This report reviews the dispute resolution mechanisms available in the United States to address, among other things, double taxation.

Regarding the main findings, the United States are found to be deficient regarding the following:

“[…] not all treaties are consistent with the requirements of the Action 14 Minimum Standard, as:

  • some treaties do not include the full equivalent of 25(2), first sentence, of the OECD Model Tax Convention (OECD, 2015), as for example the sentence relating to providing for unilateral relief prior to the referral of the case to the bilateral phase of the MAP is missing;
  • one third of its treaties do not include the full equivalent of Article 25(2), second sentence, of the OECD Model Convention (OECD, 2015) (requiring that mutual agreements shall be implemented notwithstanding any time limits in domestic law), or include wording that might obstruct the implementation of MAP agreements by both treaty partners. None of these treaties include the alternative provisions for Article 9(1) and Article 7(2) to set a time limit for making transfer pricing adjustments; and
  • one fourth of its treaties do not include the equivalent of Article 25(3), second sentence, of the OECD Model Tax Convention (OECD, 2015) allowing competent authorities to consult together for the elimination of double taxation in cases not provided for in their tax treaties.” (p. 9 of the Report).

The average time required to resolve any MAP case is 30.87 months for 2016. As such, the Report suggests:

“Although the current available resources for the MAP function in the United States are in principle adequate to manage the influx of new MAP cases, a more adequate use of resources available for the competent authority function may be necessary to achieve a net reduction of its MAP inventory.” (p. 10 of the Report).

It is noteworthy that the number of outstanding cases at the end of 2016 was 963 in the United States in comparison to 228 in Canada whose economy is one tenth in size of the US economy.

In other words, Canada has a long-standing habit of creating double taxation issues through its transfer pricing audit practices.

The MAP Peer Review Report for the United States has been added to the library  on Transfer Pricing in the United States which is available here.

Robert Robillard, Ph.D., CPA, CGA, Adm.A., MBA, M.Sc. Econ., M.A.P.
Senior Partner, RBRT Fiscalité / Tax (RBRT inc.)
514-742-8086
robertrobillard@rbrt.ca
rbrt.ca

The information in this blog post is general information only. Data and information come from sources believed to be reliable but accuracy cannot be guaranteed. RBRT Inc., RBRT Concepts Inc. or the author are not responsible or liable for any error, omission or inaccuracy in such information. RBRT Inc., RBRT Concepts Inc. or the author are not responsible or liable with respect to the content appearing on external sources nor regarding the language of this content. The opinions expressed in this blogpost are those of the author. Readers should seek advice from RBRT Inc. as required.

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À propos de 
Robert Robillard, Ph.D., CPA, CGA, Adm.A., MBA, M.Sc. Econ., M.A.P. is Founder and Senior Partner at RBRT Fiscalité / Tax (RBRT Inc.), an accounting firm which specializes in Canadian and international taxation. Robert is also a lecturer in several tax training seminars at RBRT Concepts inc. Robert is a former Officer of the Canadian Competent Authority and a former Case Manager at the Canada Revenue Agency. Robert bas been involved in taxation for over 14 years. Robert can be reached by email at robertrobillard@rbrt.ca or by phone at 514-742-8086.