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HMRC internal manual

International Manual

Transfer Pricing: methodologies: Mutual Agreement Procedure: Introduction to MAP

Statement of Practice 1 (2018)

The Statement of Practice [see INTM 423120] sets out the UK’s practice in relation to methods for reducing or preventing double taxation and supersedes Statement of Practice 1 (2011). The revisions were prompted by experience and developments in dispute resolution, in particular, the work done in the Organisation for Economic Co-operation and Development (OECD) as part of the Base Erosion and Profit Shifting (BEPS) project under Action 14 “Making Dispute Resolution Mechanisms More Effective” and Action 15 “A Mandate for the Development of a Multilateral Instrument on Tax Treaty Measures to Tackle BEPS” [see INTM 423120]. The aim of the statement, which should be read in conjunction with this guidance, is to assist applicants by providing further clarity on the UK’s Mutual Agreement Procedure (MAP) process.


The statement provides details on the MAP Process and the use of MAP under the relevant UK tax treaty and/or the EU Arbitration Convention (EUAC). It also describes the UK’s approach to the role of arbitration as part of the MAP Process.


The Aim of MAP

MAP is a process which enables Competent Authorities of treaty partners to interact with the intention to resolve international tax disputes.  The Competent Authorities are obliged to use their best endeavours to reach an agreement with a view to the avoidance of taxation which is not in accordance with the MAP article in the relevant tax treaty.  In the UK, the Commissioners for HM Revenue and Customs (HMRC), or their authorised representatives, the UK Delegated Competent Authorities, have autonomy to enter into MAP agreements in accordance with the terms of the relevant tax treaty without being dependent on the approval or the direction of HMRC personnel directly involved with the adjustment at issue and without being influenced by policy considerations.


As part of its work on improving the MAP Process, the OECD has published a Manual on Effective Mutual Agreement Procedures (MEMAP) [see INTM 423120].  MEMAP sets out best practices for Competent Authorities of OECD countries in relation to the MAP Process.


OECD Model Convention

MAP is described in Article 25 of the OECD Model Convention (the Model Convention) [see INTM 423120] and is discussed in the Commentary on Article 25 of the Model Convention (the Commentary).


Articles 25 (1) and (2) have broad application and provide for MAP where a taxpayer considers they have been or will be taxed other than in the terms of the relevant tax treaty , for example in a way contrary to Article 24 of the Model Convention, the Non-Discrimination Article –  provided that Article is contained in the relevant tax treaty.  Article 25(3) also permits Competent Authorities to resolve any difficulties or doubts arising as to the interpretation of the Model Convention and for the elimination of double taxation in cases not provided for by the relevant tax treaty. More specifically, to eliminate double taxation in transfer pricing cases, tax administrations may consider requests for corresponding adjustments as described in Article 9 (2) of the Model Convention. That paragraph recommends that the Competent Authorities of Contracting States consult each other as necessary to determine corresponding adjustments. This clearly envisages that the MAP of Article 25 of the Model Convention may be used to consider corresponding adjustment requests.  Paragraphs 9 and 10 of the Commentary on Article 25 make it clear that corresponding adjustments fall within the scope of MAP.


In 2010 the OECD introduced a new version of Article 7 (the Business Profits Article) to the Model Convention. The 2010 version includes an avenue for entering MAP similar to that found in Article 9 of the Model Convention.


Chapter IV of the OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (The OECD Transfer Pricing Guidelines) [see INTM 423120] contains details of administrative approaches to avoiding and resolving transfer pricing disputes including MAP.


UK Tax Treaties

The UK has almost 130 tax treaties, the vast majority of which contain a MAP provision based on the provisions of Article 25 of the Model Convention. Tax treaties are a product of negotiation and therefore no two tax treaties are the same. Additionally, the Model Convention, including Article 25, has evolved over time and treaties signed in the past may not reflect the latest version. In all cases where the application of a treaty is being considered, it is therefore important to consult the text of the relevant treaty itself which are available through GOV.UK.


Tax treaties seek to protect taxpayers from double taxation; provide for the appropriate allocation of taxing rights including in relation to profits from cross-border economic activities; and prevent fiscal discrimination by their signatories. The UK seeks to encourage and maintain an international consensus on the tax treatment of cross-border activity, and plays an important role in this field through its membership of the OECD. Like almost all tax treaties internationally, UK treaties follow the terms of the Model Convention in most respects and HMRC is guided in its interpretation of those tax treaties by the Commentaries on the Articles of the Model Convention.


In this respect MAP performs an important function by establishing a process by which the UK Competent Authority and the Competent Authorities of its tax treaty partners can consult each other to resolve matters relating to the application of their tax treaties.


The UK is a member of the OECD’s Inclusive Framework on BEPS and as such has committed to implement the minimum standard and agreed to be subject to peer-based monitoring.   The UK has signed, without any reservation on the MAP article, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (the MLI) [see INTM 423120].  The MLI enables the UK to update its bilateral tax treaty network without the need for case by case renegotiation.  If the UK and the relevant treaty partner (who is also a signatory to the MLI) have designated their tax treaty as a Covered Tax Agreement and to the extent that their respective lists of reservations and notifications are aligned then their treaty will be automatically amended through the MLI.



The European Union Convention On The Elimination Of Double Taxation In Connection With The Adjustment Of Profits Of Associated Enterprises, 90/463/EEC [see INTM 423120] is available to residents of the European Union and provides a complementary mechanism for MAP discussions.

UK domestic legislation

The legal framework for the MAP in the UK is governed by the Taxation (International and Other Provisions Act) 2010 (TIOPA 2010), sections 124-125 [see INTM 423120]. Specifically with respect to the EUAC, the legislative framework is governed by TIOPA 2010, sections 126-128.