It is not uncommon to see cross-border tax disputes arising fromthe different interpretations and applications of tax treaties. Multinational corporations (MNC) always want appropriate dispute resolutions to protect their legitimate rights and also to avoid double taxation. Mutual Agreement Procedure (MAP) could be an effective means to address the MNC's concerns.
In light of the international trend to protect tax base (such as the Base Erosion and Profit Shifting (BEPS) project), doubtless tax authorities around the globe will take increasingly aggressive attitudes to protect its own taxing right. This will inevitably bring about more tax disputes between two (or even more) jurisdictions on the issues of taxing rights allocation. Against such a backdrop, we anticipate that MAP will play a more active role in the international tax arena in the near future.
MAP in China is no longer merely a concept embedded in tax treaties. We see more and more MAP cases in China in recent times. MAP has been a well-received dispute resolution channel for foreign companies deriving income from China. And in recent years, more and more Chinese MNCs investing overseas are also taking the route of MAP to resolve their tax disputes in overseas countries. There are different challenges arising from a MAP case requested by a Chinese company and initiated by a foreign company respectively.
Cathy Zou met with Matthew Mui, Tax Controversy Partner of PwC China and Garry Gao, Transfer Pricing Senior Manager, to discover how MAP makes cross-border tax disputes resolved more efficiently, and to share their experiences on some MAP cases in China.