Majority of current Double Taxation Agreements (DTA) present for the decision of disputes arising from their operation by means of the Mutual Settlement Process (MAP). This method to the decision of disputes arising from treaties has grow to be pretty customary whatever the arguments in opposition to its utility and relevance provided that the enabling provisions within the DTA impose no binding obligation to achieve settlement in respect of current disputes. Because of this, and lots of others, the efficacy of MAP is named to query. However, a comparatively much less well-liked development in worldwide tax dispute decision is the adoption of obligatory arbitration in some tax treaties, or using a brand new variants of both MAP or arbitration. Notably, the US, in a few of its tax treaties embody the obligatory binding arbitration clauses to resolve eligible circumstances wherein the competent authorities have tried however are unable to achieve a whole settlement by way of MAP. Certainly, it has been urged that maybe obligatory arbitration is a greater different or complement for searching for efficient decision of tax dispute. This method places the beam gentle on the MAP and questions its utility and continued widespread utilization. It additional triggers queries as as to if the adoption of obligatory arbitration singularly, a mix of arbitration and MAP, or utterly new different, present a extra binding, sensible and pragmatic method to the decision of disputes arising from the applying of tax treaties and different worldwide tax disputes.

Moreover, it can seem that while there’s a proliferation of MAP clauses in tax treaties all around the world, its precise adoption doesn’t get pleasure from the identical reputation in order that in locations in Africa, there’s only a few incidents of using MAP. While it’s unsure that that is merely due to its nonbinding nature, the nonpopularity of its use is alarming provided that dispute decision will solely acquire elevated relevance and it’s important that the present framework meets the wants of all gamers within the worldwide house.

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