Mutual Agreement Procedure (Map) Guidance

The report contained OECD recommendations on key areas for improvement, in addition to the minimum action 14 requirements for an effective dispute resolution mechanism. The publication of comprehensive guidelines on POPs was one of the OECD`s recommendations as part of its peer review process. As a result, on May 6, 2020, cbDT issued a communication amending the rules for POPs. In addition, in line with the recommendations of the OECD`s peer review procedure, on 7 August 2020, CBDT published detailed information on MAP processes for the benefit of taxpayers, taxpayers, tax authorities, CAs in India and relevant foreign jurisdictions. The POPs guidelines provide that subjects applying for POPs must provide gazT with transfer pricing documentation in addition to the information necessary to justify the case. There is therefore no arbitration provision in all saudi Arabia`s tax treaties in the event of an agreement between the two contracting states, the case cannot be referred to arbitration. In August 2020, the Central Council on Direct Taxes (CBDT) issued guidelines for the Mutual Agreement Procedure (MAP), which includes the following four parts: the MAP article of the Indian Agreement on Income Tax is based on Article 25 of the OECD Convention Model. An application for a POPs may be made by a taxpayer if it takes into account the actions of the tax authorities of one or both contractors or results in a tax that does not comply with the applicable tax treaty. This procedure allows the competent authorities of the contracting states to settle disputes or difficulties in interpreting or applying tax treaties on a consensual basis.

The general authority of Zakat and Tax (GAZT) in the Kingdom of Saudi Arabia (KSA) issued guidance on the Mutual Agreement Procedure (MAP). The guidelines state that the resulting interest and penalties must be managed in accordance with India`s national tax law. As a result, Indian CAs do not have a mandate to address these follow-up issues and negotiate disputes arising from these issues. While the amount of interest and penalties related to the quantum of income must vary in the same proportion as the change in the number of revenues resulting from a resolution of POPs, some fixed penalties (which are not related to quantum income) would not be affected by the dissolution under map.

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