Mutual Agreement Procedures Arbitration

The objective of BEPS 14 was to find solutions to remove barriers preventing countries from addressing contract disputes under the POP, including the absence of arbitration provisions in most contracts and the fact that, in some cases, access to POPs and arbitration may be denied. In its 2015 final report, “Dispute Resolution Mechanisms for the Application of Dispute Resolution Mechanisms” (final report), the OECD highlighted the fundamental importance of the map mechanism for the proper application and interpretation of tax treaties, the development of minimum standards for dispute resolution and a series of recommendations on best practices. BMF letter of October 9, 2018, leaflet on reciprocal international agreements and income and wealth tax arbitrations. This notice replaces the notice of July 13, 2006 – IV B 6-S 1300-340/06 -, BStBl I 2006, p. 461. The provisions of the letter of BMF of 5 April 2017 – IV B 5 – S 1304/0-04 – BBl I 2017, 707 are contained in paragraph 5 of the notice of 9 October 2018. Changes to the previous brochure include paragraph 1.1.3 (the scope of the EU Arbitration Agreement), paragraph 1.4 (coordinated by the competent authority) and paragraph 2.2.2 (information on the deadlines for filing applications in double taxation conventions). In order to avoid double taxation due to possible measures taken by the tax administrator of another state in connection with the future controlled transaction, it is desirable to ask, by asking for the alignment of the principles of pricing of future controlled transactions and the conclusion of the agreement with the competent authority of another foreign state, in accordance with the provisions of the applicable tax treaty between the Republic of Lithuania and another State, in order to avoid double taxation of income and capital. Once the application has been submitted, the procedure of mutual agreement can be initiated in accordance with the procedure provided for by the acts. The mutual agreement reached becomes binding only if the subject approves it in writing, waives the right of appeal and withdraws all pending appeals.

The legal basis for a mutual agreement procedure is the DBA concerned. Germany has concluded DBA with more than 90 countries in the world. Most of these DBAs follow the OECD`s draft international agreement. The provisions on mutual agreement procedures are set out in Article 25 of the OECD Model Convention. Recent ABA often contains provisions that prescribe arbitration through an unsuccessful mutual agreement procedure. Competent Authority (institution) – Tax inspectorate of the Ministry of Finance of the Republic of Lithuania. The permanent working group on the handling of double taxation dispute resolution procedures is responsible for handling all map cases. The point of contact for issues relating to double taxation disputes in the context of dispute resolution is: Ms. Vaide Riskute, head of the permanent working group on double taxation dispute resolution procedures.

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