The Australian Tax Authority (ATO) has reviewed and updated the mutual agreement procedure to reflect the OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS). The updated guidance caters more detailed information as followed:
The taxpayer is required to provide information related to the taxpayer identity, the basis for the request by specifying the violated article, all relevant facts of the case along with the supporting documents, all related issues involved have been dealt with previously and a statement confirming the truth of provided information.
The taxpayer may request MAP due to the self-amendments. The amendments should be made in good faith.
When taxpayers present separate and concomitant MAP requests under each tax treaty involved, and each jurisdiction has accepted the MAP request, the Competent Authorities (CAs) of each jurisdiction can be part of multilateral MAP negotiations.
The APA/MAP Program Management Unit (PMU) is responsible for the general administration of the MAP process. Meanwhile, the Competent Authority (CA) is responsible for determining whether the MAP request is justified, to decide whether to grant relief of double tax or shall try to resolve the MAP case and to communicate directly with the other jurisdictions.
The taxpayer may request a MAP for tax that results from general anti-avoidance rules in Part IVA of the ITAA 1936. However, the ATO cannot resolve it since Part IVA will prevail regardless of whether the resultant tax is contrary to the provisions of a treaty.
The Multilateral Instrument (MLI) will modify some of Australia’s tax treaties to provide for mandatory binding arbitration. The date of effect and the availability of mandatory binding arbitration will vary between each tax treaty.
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