BEPS Action 14 – Dispute Resolution Mechanisms

BEPS Action 14 “Making dispute resolution mechanisms more effective” notes that countries have agreed on a minimum standard and a number of best practices in relation to dispute resolution.

A group of 20 States, including Australia, France, Germany, Italy, Luxembourg, Spain, the United Kingdom and the United States, have also committed to provide for mandatory binding arbitration in their bilateral tax treaties.

The Final Report on BEPS Action 14 recommends a minimum standard that has been agreed for dispute resolution through the Mutual Agreement Procedure to ensure disputes between countries over interpretation or application of tax treaties will be resolved in an effective and timely manner.

The minimum standard recognises the importance of removing double taxation as an obstacle to cross-border trade and investment. The commitment also includes the establishment of an effective monitoring mechanism to ensure the minimum standard is met and countries make progress to resolve disputes quickly. A large group of countries has committed to adopt mandatory and binding arbitration in their bilateral tax treaties.

Australia’s response

Australia is committed to binding arbitration.

The Australian Government has not yet responded officially to the BEPS Action 14 recommendations.