On 22 November 2022, the OECD published Mutual Agreement Procedure ("MAP") statistics for 2021 and handed out awards to Competent Authorities who performed particularly well in 2021. The statistics shine a light on Ireland's ability to resolve MAP cases and they recognise the notable increase in Ireland's effective caseload management in recent years.
The OECD data objectively demonstrates that Ireland is now among the most effective jurisdictions for MAP resolution, as demonstrated by the OECD's statistics and recognised by their awards.
In an era of increased uncertainty on cross-border tax matters, having the support of a strong Competent Authority to resolve disputes and ensure double taxation does not arise is critical to taxpayers.
Ireland - awards and recognition
Having been awarded the "most improved jurisdiction" in the OECD 2020 MAP awards, the Irish Competent Authority went one step further this year, winning in more award categories than any other jurisdiction. The Irish Competent Authority's increased workload and dispute resolution effectiveness was recognised by the following awards:
- Ireland won an award for taking the shortest average time to close MAP cases in the non-transfer pricing category, taking approximately 5 months to close non-transfer pricing MAP cases;
- Ireland came first in the caseload management category for having the highest closing ratio of transfer pricing and other cases (in other words, of the jurisdictions with the most MAP cases, Ireland closed more cases than any other jurisdiction);
- Ireland (together with the UK) won the "co-operation" category for having the most MAP cases fully resolved through agreement by a pair of jurisdictions in the non-transfer pricing category; and
- Ireland won second place for having the smallest portion of pre-2016 cases in its inventory.
Further details on the 2021 MAP awards are available here.
Ireland's MAPs cases – interesting stats
The OECD's full statistical breakdown on Ireland also reveals some interesting insights:
- Ireland resolves the overwhelming majority of its MAP cases by agreement to fully eliminate double taxation (82% for transfer pricing cases and 97% for non-transfer pricing cases);
- No cases were denied MAP by Ireland in 2021;
- At the end of 2021, Ireland had 149 open MAP cases, 86 (58%) of which are transfer pricing cases. While this is a decrease from 2020, when Ireland had 151 MAP cases at year end, compared with a total of 45 cases as at the end of 2016, it's clear that overall there has been a corresponding large increase in international tax disputes and MAP cases during that period;
- Transfer pricing cases still take significantly longer to resolve (taking almost 7 times longer on average) than non-transfer pricing cases; and
- In 2021, the jurisdiction which Ireland had the highest number of transfer pricing MAP cases with was Denmark, followed by Italy.
Further details on the 2021 MAP statistics are available here.
What does this mean for taxpayers considering MAP in Ireland?
There are a number of avenues for taxpayers in Ireland to request MAP assistance, including under the terms of the relevant double taxation agreement (in conjunction with the relevant articles of the Multilateral Instrument where applicable), the EU Arbitration Convention, and the European Union (Tax Dispute Resolution Mechanisms) Regulations 2019. As is clear from the OECD data, taxpayers in Ireland are using these avenues to pursue MAP more and more frequently to eliminate double taxation and resolve international tax disputes. In a similar vein to MAP, based on our own experiences, Advanced Pricing Agreements ("APAs") have also increased in demand as taxpayers seek certainty amid the uncertain international tax landscape.
The MAP statistics reflect the significant increase in resources in the Irish Competent Authority team in recent years. This is clearly borne out in the percentage of MAP cases that result in the elimination of double taxation. The data demonstrates that Ireland has become one of the most effective MAP dispute resolution jurisdictions, a factor that is closely watched by international groups considering Ireland as an FDI location.
That said, the data confirms that transfer pricing cases still take significantly longer to reach conclusion than the BEPS Action 14 recommended timeframe of 24 months. The average time taken to resolve transfer pricing MAPs has more than halved for cases started after 2016 (down to an average of just over 35 months compared with almost 80 months for pre-2016 cases). While delays can, in part, be attributed to the other Competent Authority jurisdictions involved, Ireland is actively seeking to further reduce the duration of transfer pricing MAP cases. It's anticipated that the increased face to face meetings taking place between Competent Authority teams following the pandemic will assist with reducing this timeframe.
Matheson's transfer pricing team has vast experience with MAPs and APAs and regularly works with tax and legal advisors across a large number of different jurisdictions coordinating MAPs, APAs and international tax disputes. If you have any questions, please contact Mark O'Sullivan, Anna Crowley or your usual Matheson Tax contact.