OECD 2010 MAP statistics: Canada, Germany and Poland comment

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

OECD 2010 MAP statistics: Canada, Germany and Poland comment

The OECD has released mutual agreement programme (MAP) statistics for 2010. Canada, Germany and Poland tell TPWeek what these stats mean for them.

oecd150.gif

The statistics aim to provide transparency in the MAP process and highlight the trends behind the inventory.

Germany

Germany initiated 150 MAP cases in 2010, second only to the US, which opened 252.

MAPs are dealt with by the Federal Central Tax Office, which according to Alexander Voegele of NERA, is a “skilled and successful, but somewhat understaffed agency”.

“Although the Federal Central Tax Office is generally very supportive, even in difficult cases, the cycle time until a tax dispute is resolved can be significant,” said Voegele. “This is primarily due to Germany’s very specific federal structure, with the main tax responsibilities being at the state level.

“Due to these fractured responsibilities, German MAP staff need to liaise not only with the competent authorities of other countries, but also with the tax agencies of the states. The result is that compromise between multiple parties can be very hard and time-consuming to achieve, in particular for some complex cases,” Voegele added.

Germany’s economy is strongly linked into the global economy and this is leading to a trend in triangular MAP cases, involving three or more countries, and this is adding to the time individual cases take to clear.

However, whereas 37 of the cases unresolved by the end of 2006 had been older than six years, this number dropped to only 10 cases by the end of 2010, despite the total number  in the MAP inventory, that is yet to be resolved, rising slightly during the same time from 476 to 484.

“It is positive that the collectionof assessed tax may be postponed until termination of an MAP or a legal remedy and that interest, which is charged during the suspension of tax collection, is more and more part and parcel of the MAP agreement settling the case,” said Voegele.

Canada

Canada is renowned for its dispute culture, with an aggressive tax authority and notorious number of well-known transfer pricing disputes such as GE Capital Canada and GlaxoSmithKline.

An arbitration clause, between the US and Canada, was enacted at the end of 2010 to mitigate the large number of transfer pricing disputes that arise between these two countries alone.

“The challenges faced by the competent authority (CA) should not surprise anyone,” said Matthew Wall of MDW Consulting. “In Canada, although the CA has hired more people, it is hard to keep pace with the volume and complexity of requests.”

The number of cases accepted has almost tripled in the last five years from 273 cases in 2006 to 2007 to 743 cases in 2010 to 2011.

“This explains the longer wait times throughout the CA process,” said Wall. “However, more worrying is the increased number of cases that go unresolved – double taxation – from 6%, or four cases, in 2006 to 2007 to 14%, or 13 cases, in 2010 to 2011. Unlike before, taxpayers must now consider if they will be successful at the CA, or if they will be better served by the appeals process and Tax Court of Canada.”

Wall said it is reasonable to expect most other countries are having the same or similar challenges.

Poland

In Poland MAP cases and advance pricing agreements (APA) are dealt with in the same department in the Ministry of Finance, but with separate, dedicated, teams.

“They are quite active on MAPs in respect of contacting and communicating other jurisdictions in particular with German tax authorities. I believe that most MAPs are with Germany,” said Aneta Blazejewska of Ernst & Young.

The average time for each case in 2010 was 20 months and this has slightly decreased compared to 2009 – 27 months - but is almost double as much as in 2006 where it was only 12 months.

“[However] it seems that Poland runs the biggest number of MAP in the region, compared to Czech Republic, Hungary and Slovakia,” said Rafal Mikulski of Salans.

The MAP process is losing ground to the APA programme, though.

“The timing still however looks like being not very efficient in contrary to APAs which are becoming more and more time efficient,” said Blazejewska.


more across site & shared bottom lb ros

More from across our site

Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
A ‘joint understanding’ among G7 countries that ‘defends American interests’ is set to be announced, Scott Bessent claimed
The ‘big four’ firm’s inaugural annual report unveiled a sharp drop in profits for 2024; in other news, Baker McKenzie and Perkins Coie expanded their US tax benches
Representatives from the two countries focused on TP as they met this week to evaluate progress under a previously signed agreement – it is understood
The UK accountancy firm’s transfer pricing lead tells ITR about his expat lifestyle, taking risks, and what makes tax cool
Dolphin Drilling intends to discuss the final liability amount and manner of settlement with HM Revenue and Customs
Winning the case against the 20% VAT imposition was always going to be an uphill challenge for the claimants, UK tax advisers argue
A ‘paradigm shift’ in Chile’s tax enforcement requires compliance architecture built on proactive governance, strategic documentation and active monitoring of judicial developments
Paul Monaghan, CEO of the Fair Tax Foundation, digs into where companies are going wrong with CbCR, the ‘Russia question’, and shares new data exclusively with ITR
The long-awaited overhaul of Brazil’s tax systems will cause uncertainty for businesses. Experts from Lavez Coutinho argue it is essential for company leaders to get ahead of the issues
Gift this article