Resolving double taxation in a global environment – when might it impact on deal value? Consideration of the availability of mutual agreement procedures and arbitration
Sarah Blakelock A and George Hempenstall A BA KPMG Law, GPO Box 223, Brisbane, Qld 4000, Australia.
B Corresponding author. Email: georgeh@kpmg.com.au
The APPEA Journal 58(2) 501-504 https://doi.org/10.1071/AJ17119
Accepted: 8 March 2018 Published: 28 May 2018
Abstract
Multinationals are under increasing scrutiny by revenue authorities across the globe. The heightened risk of tax audits, transfer pricing adjustments and the potential for double taxation mean that it is more important than ever for multinationals to consider what strategies are available to resolve international tax disputes.
Inherent tax risk and uncertainty creates unique challenges for oil and gas multinationals as it can impact on deal value where double taxation arises. This is because countries are increasingly behaving like companies – competing to preserve and defend their tax base.
With the Organisation for Economic Co-operation and Development’s (OECD’s) Multilateral Instrument pending ratification by the Australian Parliament, this paper considers the availability and practical use of the mutual agreement procedure (MAP) for the resolution of double taxation. Additionally, the paper provides an overview of which jurisdictions have opted to adopt arbitration as a mechanism to resolve double taxation disputes where the MAP has failed.
Keywords: base erosion profit shifting, Multilateral Instrument, OECD, transfer pricing.
Sarah Blakelock is a partner in KPMG Law’s Tax Dispute Resolution and Controversy practice. Sarah has more than 15 years’ experience focusing on the prevention, management and resolution of tax disputes. She specialises in advising clients on strategy and the management of risk reviews and audits, evidence gathering, tax risk and corporate governance as well as dispute resolution and litigation. Sarah has acted for multinational enterprises, ASX-listed companies, large corporates and leading financial institutions as well as for the Federal Commissioner of Taxation. Sarah is one of the few tax practitioners in Australia with experience in managing and resolving multi-jurisdictional disputes by international arbitration and complex international regulatory investigations (across Australia, New Zealand, Vanuatu, Singapore, Hong Kong and the United Kingdom). Sarah is a member of the executive of the International Fiscal Association’s Australian Branch, has been a Chartered Tax Advisor since 2004, and since 2013 a member of the Tax Institute’s Queensland State Council. Sarah is often called on to present papers and join panel discussions concerning global and domestic tax dispute resolution. Sarah is recognised in Best Lawyers – Tax Law 2017 and 2018; Who’s Who Legal – Corporate Tax, Tax Controversy – 2016, 2017 and 2018; International Tax Review – World Tax Rankings 2015, 2016, 2017 and 2018; Chambers and Partners 2014, 2015 – Asia Pacific and Legal 500 Asia Pacific 2014, 2015. |
George Hempenstall is a consultant in KPMG Law’s Tax Dispute Resolution and Controversy practice. George is a recent graduate of Bachelor of Laws/Bachelor of Science (Extended Major in Mathematics) at the University of Queensland. During the course of his studies, George completed three taxation electives, one of which he undertook overseas at the London School of Economics. Prior to joining KPMG, George worked with Piper Alderman as a law clerk in commercial litigation, with an emphasis in securities class actions and corporate disputes. |
References
OECD (2016). ‘Mutual Agreement Procedure Statistics 2006–2015.’ OECD Publishing. Available at http://www.oecd.org/tax/dispute/map-statistics-2006-2015.htm [Verified 21 February 2018].OECD (2017). ‘Model Tax Convention on Income and on Capital: Condensed Version 2017.’ OECD Publishing. Available at http://www.oecd.org/tax/treaties/model-tax-convention-on-income-and-on-capital-condensed-version-20745419.htm [Verified 21 February 2018].
OECD (2018). ‘Multilateral Instrument Matching Database.’ OECD Online. Available at http://www.oecd.org/tax/treaties/mli-matching-database.htm [Verified 12 March 2018].
