MAP developments in the desk-bound age
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MAP developments in the desk-bound age

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Edward Morris and Jamie Hawes of Deloitte discuss how the resolution of controversy has changed with the introduction of a more efficient system to handle MAPs and APAs.

Cross-border business activity and the movement of workers between countries continue to grow ever faster in the modern global economy. As a result, disputes inevitably arise as to which jurisdictions can tax what types of profits and how much of that profit can be taxed where.

Disputes between businesses and tax administrations, and between tax administrations themselves, are ever more frequent. The minimum standard under Action 14 of the BEPS initiative seeks to improve the resolution of such disputes between tax administrations, under the auspices of the mutual agreement procedure (MAP) article of the relevant tax treaty in force between the countries concerned.

Members of the BEPS Inclusive Framework have committed to a peer review process whereby each country’s compliance with the Action 14 minimum standard will be reviewed and monitored, with a goal of increasing efficiencies and improving the timeliness of resolving double tax issues.

Article 25 of the OECD Model Tax Convention lays out a process used to resolve such tax-related disputes – the MAP. The MAP is a mechanism through which the competent authorities of the Contracting States may resolve issues regarding the interpretation or application of the Convention and thereby relieve double taxation. This mechanism is of fundamental importance to the proper application and interpretation of tax treaties, as it means that taxpayers who are entitled to the benefits of a treaty will not be subject to taxation which is not in accordance with the treaty.

Recent statistics show that tax administrations are closing more cases than ever before. Nevertheless, the volume of new MAP cases is increasing even faster.

Anecdotal evidence suggests that the increase in new cases is due to a range of factors. The main driver for more disputes entering MAP, however, is more disputes between taxpayers and tax administrations, which disturb tax filing positions and create taxation not in accordance with the relevant tax treaty.

The MAP article is designed to help eliminate this double taxation. For this elimination to work in practice, though, the MAP framework itself needs to be fit for purpose, efficient and fully functioning. Thus, the reasoning behind Action 14.

For a number of years, the OECD members have sought to improve MAP processes by focusing on the three broad areas of accessing the MAP, resolving the MAP, and implementing the MAP outcome. The OECD’s Multilateral Instrument (MLI) ushered in improvements in the legal background to MAP in MLI Article 16. These improvements included:

  • An agreed time limit for accessing MAP (three years from the ‘first notification’ of the action that causes taxation not in accordance with the relevant treaty);

  • A more widespread adoption of arbitration to mandate an elimination of the taxation not in accordance with the relevant treaty; and

  • A stipulation that the MAP agreement should be implemented notwithstanding any time limits in domestic law (see OECD BEPS Action 15, Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, Article 16).

Improvements in the legal background to MAP are always welcome, though actual legal changes in the MLI do of course need to be enacted domestically by countries before having any practical effect on MAPs.

Indeed, it is in the very area of the practical conduct of MAPs that many developments have been seen that are worthy of note.

The rest of the article describes some of the developments in MAP that have been seen recently around the world, particularly initiatives that the various competent authorities (the officials charged with the resolution of MAP cases) have adopted in response to the new work environment caused by the worldwide COVID-19 pandemic.

It has been interesting to see how new processes have not only helped increase efficiency in the current environment but will, it is hoped, provide ways to resolve cases more efficiently going forward. We first turn to the US, which, according to the latest OECD statistics, had 1022 MAP cases on hand at the close of 2019, second only to Germany with 1242 cases on hand.

Impact of COVID-19 on the competent authority process in the US

The Advance Pricing and Mutual Agreement (APMA) Programme, which serves as the US Competent Authority, has continued to work without major interruption since the COVID-19 pandemic began in 2020.

On March 27 2020, as with other divisions at the Internal Revenue Service (IRS), the APMA Programme underwent an evacuation order which prevented employees from coming into the office. Many APMA employees had already been able to telework to some extent, but the evacuation order required them to telework on a full-time basis. As a result, the APA Programme needed to find ways to communicate effectively with US treaty partners and with taxpayers even though they could not meet face-to-face, such as through conference calls, emails, and virtual meeting platforms.

Before the pandemic, many treaty partners were reluctant to resolve cases without a face-to-face meeting. However recent experience has indicated that, through the use of new technologies, some cases have been resolved without any in-person meetings at all.

Though there has not been an official pronouncement, we are hopeful that the APMA Programme will continue to use these means of communication even after the COVID-19 restriction orders have been lifted. If so, such technology, especially the virtual meeting platforms, could be used, among other things, to:

  • Advance cases between face-to-face government discussions;

  • Potentially offer ways to conduct site visits virtually; and

  • Facilitate three-party meetings between the governments and taxpayers to resolve difficult issues that might arise during a case.

This, in turn, could enable the APMA Programme to be even more productive than before the COVID-19 pandemic began.

Another area that has been a by-product of the response to COVID-19 and which has increased efficiency is the ability to use electronic signatures and submit applications electronically.

On May 11 2020, IRS officials announced certain modifications to procedures for filing MAP-related documents pursuant to Rev. Proc. 2015-40, 2015-35 IRB 236, and documents relating to advance pricing agreements (APAs) pursuant to Rev. Proc. 2015-41, 2015-35 IRB 23.

In particular, pursuant to temporary guidance issued by the Deputy Commissioner, Services and Enforcement (DCSE), IRS officials announced on March 27 2020, that any documents requiring a taxpayer’s signature under Rev. Proc. 2015-40 or 2015-41 may be submitted with either:

  • An image of the taxpayer’s signature (scanned or photographed); or

  • The taxpayer’s digital signature created using encryption techniques to provide proof of original and unmodified documentation.

Also pursuant to the DCSE guidance, IRS officials announced that all submissions required by either Rev. Proc. 2015-40 or 2015-41 may be filed electronically and that paper copies were not required (see Competent Authority Filing Modifications and APMA APA Consultations).

In our experience, these initiatives have helped the APMA Programme keep its processes on track during a time when manual signatures and paper filings became impractical. It has also been our observation that these initiatives have helped increase the efficiency of case resolutions, specifically in reducing the time required to obtain all signatures on official documents signed by taxpayers and the APMA Programme.

As the COVID-19 pandemic wanes, face-to-face meetings will almost certainly resume, especially to conduct negotiations with certain treaty partners. In addition, paper filings and manual signatures will again be possible.

Despite this, the APMA Programme has shown such a level of comfort and efficiency with these new initiatives that hopefully they or initiatives like them will be kept as standard operating procedures going forward. That way, MAP cases will continue to be resolved more efficiently, with the goal of MAP case resolutions overtaking the number of MAP cases opened.

Wider developments

It is interesting to draw out some of the common themes that have been noted in interactions with the various competent authorities around the world, often mirroring the developments in the US described above.

We saw consistently across the globe an initial slow-down in competent authority activity during the early period of the pandemic as tax administrations dealt with their own internal staffing issues and the need to work differently to protect the officials and the wider public. However, this initial disruption to MAP (and other tax administration) activity quite often turned out to be relatively short-term as competent authorities organised to work at home with full access to secure on-line systems.

The need to rely on and access often voluminous paper files has been reduced in many countries. Better information technology (IT), communications and access to information held, bought in by necessity at a varying pace but across many tax administrations, can only lead to longer-term efficiencies in MAP resolutions. It is understandable that the absolute requirement to secure confidentiality and maintain treaty protocols mean that different tax administrations are adopting more modern electronic procedures at different speeds – but the direction of travel (IT-related at least) is clear.

Traditionally, most observers would agree, MAP cases were resolved not by the exchange of position papers between competent authorities but by actual meetings between competent authorities. Written exchanges by necessity need to be formally conducted since, it is generally accepted, they are governed by the Exchange of Information article of the relevant treaty, even though Article 25 permits the competent authorities to communicate directly with one another.

Previous OECD-driven improvements have in part focused on encouraging the timely issuance of position papers. But where a case needed to be negotiated, face-to-face meetings invariably proved necessary. In the past, this often meant international travel. Government budgets and the understandable need for business cases for public expenditure often meant that a number of MAP cases needed to be ready for discussion, sufficient to warrant the expenditure on a face-to-face meeting. Diaries would need to be coordinated for all necessary stakeholders across several MAPs. There were a host of practical impediments that prevented the more timely resolution of cases.

However, the imperative to resolve MAPs without live face-to-face meetings has ushered in a series of practical measures designed to facilitate interaction between competent authorities. It is striking that, where video conference facilities are available for both competent authorities in a MAP, cases can be resolved much as before, without the need for expensive travel. Also, of course, it is clearly possible that a video conference can be arranged to discuss even one MAP case in isolation. Hence, one can see that a short-term necessity may well lead to long-term improvements.

Indeed, building on the lessons learned from the need to keep competent authorities functioning during the COVID-19 pandemic, it is very likely that a more flexible, pragmatic approach to the often practical difficulties that once stood in the way of a more efficient resolution of MAPs will be seen.

Improvements and clarifications in the legal framework of the MAP itself have proven only half the story behind both the numbers of MAPs being entered into and the time taken to resolve the issues being discussed. With the numbers of tax administration audits into cross-border related issues seemingly rising year on year, the number of MAP applications will continue to increase. The timely resolution of these cases will require the best efforts of competent authorities everywhere if the laudable desires of BEPS Action 14 are to be realised.

Click here to read Deloitte's TP Controversy Guide 2021

Edward Morris



Deloitte UK

T: +44 078 1329 2806


Edward Morris is a partner at Deloitte UK. He specialises in transfer pricing (TP) dispute prevention and resolution and he has been instrumental in setting up Deloitte’s Global TP controversy team, consisting of former tax administration personnel and in particular former government competent authorities. This network has a global reach and expertise and helps clients with MAPs, APAs and TP enquiry resolution.

Prior to joining Deloitte UK, Edward worked for HMRC as a tax inspector and as a UK competent authority, at the EU Commission and also at the various OECD working parties concerned with tax treaties, TP and permanent establishments. As a former UK Competent Authority, Edward maintains excellent relations with the current HMRC Competent Authority team and Competent Authorities all over the world.

Edward helps clients across all industry sectors deal with the increasingly complex world of tax disputes. He has dealt with disputes in every imaginable business sector, from energy and resources, shipping, lifestyle, consumer, automotive, tech, pharma, life sciences and manufacturing. He has also appeared consistently in Euromoney’s Transfer Pricing Expert Guides since joining Deloitte.

Jamie Hawes


Senior manager

Deloitte Tax LLP

T: +1 20 2220 2636


Jamie Hawes is a senior manager in Deloitte Tax LLP’s Washington National Tax Office, and a member of the firm’s national APA and MAP group. His practice focuses on TP, particularly APAs and competent authority assistance requests.

Prior to joining Deloitte Tax LLP, Jamie spent eight years at the IRS in Washington, DC. During his time at the IRS, he worked in the Office of Associate Chief Counsel (International) (ACCI) and the APMA Programme. While at ACCI, he focused primarily on guidance involving cross-border mergers and acquisitions, corporate inversions, and the check-the-box entity classification rules. At APMA, he served as a team leader, where he was responsible for the negotiation and resolution of APAs and mutual agreements with taxpayers and foreign competent authorities.

Jamie has a master of laws degree in US international taxation from the University of Florida Levin College of Law and a juris doctor degree from Washington and Lee University School of Law.

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