Mutual Agreement Procedure (MAP) is a procedure through which Competent Authorities consult and interact to resolve international tax disputes and to avoid double taxation arising from actions of one or both of the contracting states resulting in taxation that is not in accordance with the applicable double taxation convention. Generally, MAP is followed for transfer pricing cases, anti-abuse provision claims, and multilateral disputes and for multi-year resolution of cases.
The UAE tax authorities published guidance dated 7 January 2021 on MAP, which provides taxpayers an overview of MAP as a tax dispute resolution mechanism as well as guidance on making a MAP application, the MAP process, minimum requirements, and other related matters. The guidance clarifies that MAP requests will be accepted only if:
- The issue or transaction relates to a jurisdiction with which UAE has a double taxation convention;
- It is apparent that the actions of one or both jurisdictions resulted in or will result in taxation not in accordance with the convention; and
- The taxpayer notifies the UAE’s Competent Authority within the time limits specified in the applicable convention.
An APA is an agreement entered into between a taxpayer and a tax authority for determination, in advance, of the arm’s length price or the manner of determination of the arm’s length price in relation to transactions between related parties.
Effective 1 June 2023, a person can request the tax authorities for an advance pricing agreement regarding proposed or existing transactions or arrangements. The request must be made in the form and manner to be specified by the tax authorities.
Clarifications can also be requested from the tax authorities regarding the application of the federal corporate tax law.