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OECD releases latest dispute resolution statistics at its first Tax Certainty Day

16/09/2019 – The first OECD Tax Certainty Day took place today at OECD headquarters in Paris. As recognised by G20 Ministers, maintaining and enhancing tax certainty brings benefits for taxpayers and tax administrations alike and is key in promoting investment, jobs and growth. This is particularly the case against the backdrop of the rapid digitalisation of the economy, the emergence of new business models, increased internationalization putting pressure on audit practices and driving changes in the international tax rules. Enhancing tax certainty is one of the main priorities of the OECD Forum on Tax Administration which brings together 53 advanced and emerging tax administrations. 

The Tax Certainty Day brought together over 200 tax policy makers, tax administrations, business representatives and other stakeholders from over 50 countries. They took stock of the state of the tax certainty agenda and discussed ways to make further improvements in both dispute prevention and dispute resolution. The discussions covered the full suite of tax certainly tools available to tax administrations, including co-operative compliance programmes, advance pricing agreements, the International Compliance Assurance Programme (ICAP), joint audit and the mutual agreement procedure (MAP). The Tax Certainty Day also saw France joining the ICAP pilot, bringing the total number of tax administrations participating in the ICAP Pilot to 18. The meeting noted the relevance of the OECD’s recently published report on tax morale. The report explores the latest evidence concerning the importance of tax certainty as a determinant of the willingness of business to engage positively in the tax system, particularly in developing countries.

The 2018 MAP statistics* were released today covering 89 jurisdictions and almost all MAP cases worldwide. They contain detailed information on each jurisdiction as well as aggregated global information. Highlights include:

  • Inventory: New cases keep increasing: compared to 2017, new transfer pricing cases are up by almost 20{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} and other cases by more than 10{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}. The majority of tax administrations are closing more cases than before and the country data show a decrease of inventory in about half of the reporting jurisdictions and an increase in the other half. However, the aggregated global inventory continues to rise, especially because for transfer pricing cases the number of cases closed increases at a slower pace than the number of cases started. 
  • Timelines: On average transfer pricing cases continue to take more time with average times being as follows in 2018: approximately 33 months for transfer pricing cases (30 months in 2017) and 14 months for other cases (17 months in 2017). Average times for case resolution vary significantly by jurisdiction, ranging from 2 to 66 months. Similarly to what was observed in 2017, about 60{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of reporting jurisdictions met the 24 months target across all their cases. 
  • Outcomes: More than 80{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of MAPs concluded in 2018 resolved the issue for transfer pricing cases and more than 75{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} for other cases. Indeed, almost 75{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of transfer pricing MAP cases closed were resolved with an agreement fully or partially resolving taxation not in accordance with tax treaty, 5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of them were granted a unilateral relief and 5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} were resolved via domestic remedy. For other cases, these outcomes represent respectively 50{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}, 25{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} and 3{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} approximately. Only 2{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of the MAP cases were closed because the competent authorities could not find a mutual agreement. 
  • Jurisdiction specific indicators: For the first time, the 2018 MAP statistics compare the reporting jurisdictions’ performance with respect to key indicators such as the time taken to close MAP cases and the number of MAP cases closed compared to a jurisdiction’s caseload, for each type of cases. Graphs show the evolution of the MAP inventory of the reporting jurisdictions since 2016 and similarly to previous years, jurisdiction specific files are also available. For the cases started since 2016 a breakdown of the MAP inventory is available per treaty partner and by type of cases. Jurisdiction specific reporting enhances transparency, brings visibility and allows to improve focus. This last feature will only increase in relevance over time as more and more of the inventory will relate to new cases and thus be reported on that basis.

Media enquiries should be directed to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration (+33 1 45 24 91 08) or Achim Pross, Head of the International Co-operation and Tax Administration Division (+33 1 45 24 98 92).