Analysis of MAP Under FT&TR

The Foreign Tax and Tax Research (FT & TR) division within the Central Board of Direct Taxes (CBDT) in India is responsible for providing guidance and assistance on tax-related matters to taxpayers and tax professionals. This includes providing guidance on the mutual agreement procedure (MAP), which is a mechanism for resolving cross-border tax disputes between taxpayers and the tax authorities of two different countries.

Under the MAP process, a taxpayer may request the resolution of a tax dispute through mutual agreement between the tax authorities of the two countries involved. The MAP process is governed by the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Double Taxation Avoidance Agreement” or DTAA), which India has signed with many other countries.

The FT&TR division is involved in the MAP process in various ways, including:

• Providing guidance on the MAP process and the relevant provisions of the DTAA
• Responding to queries and providing clarification on MAP-related matters
• Providing technical assistance on MAP-related matters to taxpayers and tax professionals
• Participating in the MAP process on behalf of the Indian tax authorities

Overall, the FT & TR division plays a crucial role in helping taxpayers and tax professionals understand and navigate the MAP process in India. If you have a tax dispute with the tax authorities of another country and are considering using the MAP process to resolve it, you may contact the FT & TR division for assistance.

In India, a mutual agreement procedure (MAP) is a mechanism that allows taxpayers to resolve disputes with the tax authorities in relation to cross-border tax issues. The MAP process is governed by the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Double Taxation Avoidance Agreement” or DTAA), which India has signed with many other countries.

The MAP process allows taxpayers to request the resolution of a tax dispute through mutual agreement between the tax authorities of the two countries involved. This can be an alternative to litigating the dispute through the courts.

To initiate the MAP process, a taxpayer must submit a written request for mutual agreement to the tax authorities in the relevant countries. The request should include detailed information about the tax dispute, including the tax treaty provisions at issue and the taxpayer’s position on the matter.

Once the request is received, the tax authorities in both countries will review the case and try to reach a mutual agreement to resolve the dispute. If an agreement is reached, it will be reflected in a written statement or protocol, which will be signed by both tax authorities.

There are several cases in India that involve the mutual agreement procedure (MAP) and the resolution of cross-border tax disputes. Here are a few examples:

• CIT vs. Siemens Aktiengesellschaft (2014): In this case, the Indian tax authorities had disallowed certain expenses claimed by the taxpayer, a German company, on the grounds that they were not incurred for the purpose of the business. The taxpayer appealed the decision and the case was referred to the MAP process. The German tax authorities and the Indian tax authorities reached a mutual agreement to resolve the dispute, and the agreement was upheld by the Indian courts.
• CIT vs. Nokia Networks Oy (2015): In this case, the Indian tax authorities had assessed the taxpayer, a Finnish company, for tax on certain payments received from its Indian subsidiary. The taxpayer appealed the assessment and the case was referred to the MAP process. The Finnish tax authorities and the Indian tax authorities reached a mutual agreement to resolve the dispute, and the agreement was upheld by the Indian courts.
• CIT vs. Royal Dutch Shell plc (2016): In this case, the Indian tax authorities had assessed the taxpayer, a UK company, for tax on certain payments received from its Indian subsidiary. The taxpayer appealed the assessment and the case was referred to the MAP process. The UK tax authorities and the Indian tax authorities reached a mutual agreement to resolve the dispute, and the agreement was upheld by the Indian courts.

These cases demonstrate the effectiveness of the MAP process in resolving cross-border tax disputes and the role of the courts in upholding mutual agreements reached through the MAP process.

It’s important to note that the MAP process can be a lengthy and complex process, and it may not be suitable in all cases. Taxpayers should seek legal advice before initiating the MAP process to ensure that it is the appropriate course of action for their situation.