MAP is an alternative available to taxpayers to resolve disputes giving rise to double taxation, whether juridical or economic in nature. An agreement for avoidance of double taxation between countries would give authorisation for assistance of
Competent Authorities (CAs) in the respective jurisdiction under MAP.
Instances giving rise to double taxation
Generally, the issues giving rise to double taxation
are submitted by taxpayers for resolution under MAP. Some of the instances giving rise to double taxation are:
1. Adjustment arising from transfer pricing
2. Issues relating to the existence of permanent
3. Characterisation or classification of income
4. Attribution of profits to permanent establishments
5. Withholding tax is levied beyond the allowance
limit within an applicable tax convention
6. When a taxpayer is considered to be a resident of
two treaty countries
Benefits of MAP
The main benefit of pursuing MAP is the elimination of double taxation. Moreover the MAP resolution, once accepted, eliminates protracted litigation.