OECD releases 2013 Mutual Agreement Procedure statistics

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1 2 December 2014 Global Tax Alert News from Transfer Pricing and Controversy EY Global Tax Alert Library Access both online and pdf versions of all EY Global Tax Alerts. Copy into your web browser: Services/Tax/International- Tax/Tax-alert-library#date OECD releases 2013 Mutual Agreement Procedure statistics On 25 November 2014, the Organisation for Economic Co-operation and Development (OECD) released its annual statistical publication on the Mutual Agreement Procedure (MAP) caseloads of all OECD member countries and partner economies for the 2013 reporting period. 1 The report covers opening and ending inventory of MAP cases for 2013, the number of new MAP cases initiated, number of MAP cases completed, cases closed or withdrawn with double taxation, and average cycle time for cases completed, closed or withdrawn. Overall 2013 inventory The ending inventory of MAP cases has steadily risen in the last few years as a result of the relatively large number of newly initiated cases, coupled with reduced closure rates. At the end of 2013, there were 4,566 cases in ending inventory, a 12% increase over 2012 and a 94.1% increase compared to the 2006 reporting period. Germany (858), United States (732) and France (618) had the largest ending inventory of MAP cases in The separation of reported MAP cases into cases between OECD member countries and cases between OECD and partner economies continues to show that more than 90% of OECD member countries MAP inventories are cases with other OECD member countries. MAP cases initiated during 2013 According to the OECD data, member countries witnessed a 14% increase in new MAP cases initiated in 2013, rising to 1910 cases from 1678 in The United States experienced the largest overall number of new MAP cases of all OECD member countries (from 236 in 2012 to 403 in 2013) while New Zealand experienced the largest percentage growth of new cases, at 367% (an increase from 3 cases in 2012 to 14 cases in 2013). Table 1 below presents the 10 OECD member countries with the largest number of MAP cases initiated in 2013:

2 Table 1: Countries with the highest number of new MAP cases in 2013 Country Number of new cases United States 403 Germany 267 France 216 Switzerland 131 Canada 127 Belgium 124 United Kingdom 79 Netherlands 75 Sweden 65 Finland 56 The total number of MAP cases has experienced a steady increase since 2008, declining slightly only in Figure 1 below presents the number of new cases initiated from 2006 to 2013, along with year-on-year growth rates. Figure 1: New MAP cases, Global Tax Alert Transfer pricing and Controversy

3 MAP cases completed in 2013 While 1910 new MAP cases were initiated in 2013, only 197 cases (including those with partner countries) were reported to have been completed in This is a reduction of approximately 30% from the 279 cases reported completed in While many of the 197 closed cases will have been initiated before 2013, the closure rate represents just 10.3% of the 2013 case initiation rate and only 4.3% of the total stock of open MAP cases. The five countries completing the most MAP cases in 2013 were Luxembourg (27), Belgium (25), Netherlands (23), Sweden (23), and Switzerland (23). The United States did not report how many cases were closed in Some MAP cases were reported to be closed or withdrawn with double taxation during The five countries with the highest ratios of cases closed or withdrawn with double taxation to cases closed are illustrated in Table 2 below: Table 2: Highest ratios of cases closed to cases closed or withdrawn with double taxation Country Number of cases closed Number of cases closed or withdrawn with double taxation 2 Percentage rate Spain % Germany % Canada % Netherlands % Denmark % Average cycle time for cases completed, closed or withdrawn 3 The average time for the completion of MAP cases with other OECD member countries in 2013 was months, a reduction of the 2012 cycle time of months. 4 Very few countries reported average cycle time in 2013, but interestingly, New Zealand, Portugal, Luxemburg and Netherlands all reported average cycle times average cycle time for completed, closed and withdrawn cases of less than three months. Conclusion The release of this data by the OECD is part of its effort to improve dispute resolution processes, in line with the Multilateral Strategic Plan on Mutual Agreement Procedures 5 launched by the Forum on Tax Administration, as well as Action 14 of the OECD s BEPS (Base Erosion and Profit Shifting) Action Plan. Both initiatives set out to achieve more effective dispute resolution results and the availability of this data enables interested groups to access the effectiveness of the MAP processes in the OECD member countries and partner economies. Global Tax Alert Transfer pricing and Controversy 3

4 Endnotes The United States did not provide this data. 3. Ibid. 4. Not all countries reported average cycle time For additional information with respect to this Alert, please contact the following: Ernst & Young LLP, Washington, DC David Canale Monique van Herksen Karen Kirwan Rob Hanson Rob Thomas Global Tax Alert Transfer pricing and Controversy

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