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13.4.4. APAs and Dispute Resolution Mechanisms

Effective 26 July 2019, the Tax Dispute Resolution Regulations 2019 have been implemented to ensure effective resolution of disputes concerning the interpretation and application of bilateral tax treaties and the Union Arbitration Convention, and in particular, disputes leading to double taxation between Member States.

These regulations are applicable to any complaint submitted from 1 July 2019 onwards for disputes relating to income or capital earned in a tax year commencing on or after 1 January 2018. These regulations will be applicable to complaints submitted before 1 July 2019 based on the discretion of the Commissioner and other competent authorities.

The competent authorities concerned must endeavour to resolve the question in dispute by mutual agreement within 2 years, with a possible extension of up to 1 year. If the dispute is not resolved within the stipulated time, the tax payer can opt for an Advisory Commission which is required to give its opinion within 6 months, failing which the tax payer can approach the state’s national court. The opinion of the advisory commission will be binding on the Member States unless they agree to another solution within 6 months of the opinion by the Advisory Commission. The tax payer can approach the National Court if the decision is accepted but not implemented.

The Double Taxation Agreements typically contain provisions on Mutual Agreement Procedure (MAP) for providing a remedy to the taxpayers, that may not have been taxed in accordance with the provisions of the applicable treaty and hence, intend to seek assistance from the Competent Authority.