In view of these gaps in 2017, the Council of the EU has adopted the 2017/1852 Directive on tax conflict mechanisms in the EU, in order to enable a faster and more effective settlement of tax disputes between Member States. Under the Arbitration Directive, the procedure for submitting a case (called a “claim”) is similar to that of the arbitration agreement. However, it resolves many of the convention`s shortcomings: the MLI is an essential instrument of the OECD`s ability to implement Action 14. The MLI is practically a multilateral treaty that allows jurisdictions to rapidly amend their bilateral tax treaties to implement the relevant recommendations of the OECD/G20 BEPS package. As OECD Secretary-General Angel Gurria said, “The MLI has the effect not only of saving jurisdictions from the burden of bilateral renegotiation of these treaties, but also of enhancing security and predictability for businesses and improving the functioning of the international tax system for the benefit of our citizens.” 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. In view of the POP resolution, Part VI of the MLI (Articles 18-26) refers to the mandatory arbitration procedure for MAP files. At the time of the final report, several legal systems committed to implementing mandatory POPs arbitration procedures in their bilateral tax treaties. This section is practically optional. In recent years, the OECD has continued its momentum and implemented the various measures outlined in the final report. The peer review and follow-up process, for example, aims to hold countries to account in their desire to streamline both the map process and to carry out other map files. The Online Manual on Effective Agreement Procedures between the Two (MEMAP) also outlines the OECD`s determination to continuously improve the POP process and its functionality, promote greater consistency in the handling of POP issues, and improve the speed and efficiency of the process.
Overall, it is clear that the MLI extends taxpayers` access to three years, both in terms of extending the period during which taxpayers must initiate a POB period, provides an effective two-year period for the relevant authorities to resolve a case (after that date, it may be subject to arbitration). The MLI has led to a greater homogeneity of approach on key issues such as arbitration and, above all, the adoption of a single map article for covered tax treaties.
