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Mapping out MAP procedures
- 17 September 2018
- Tax Administration
- Jessica Carr
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Jessica Carr
On 25 July 2018, the South African Revenue Service (SARS) published its Guide on Mutual Agreement Procedures (Guide) as a general guidance on the Mutual Agreement Procedure (MAP), providing parameters in which competent authorities from the governments of contracting jurisdictions can interact with the intent to resolve international tax disputes.
Finding the MAP
MAP is a procedure provided for in a double tax agreement (DTA) or “tax treaties” between the governments of two jurisdictions. DTAs or tax treaties encapsulate international agreements between foreign jurisdictions. The aim of these agreements is to eliminate the occurrence of double taxation with respect to taxes on income and on capital, without creating tax evasion or avoidance in the form of non-taxation and reduced taxation.
The tax treaties and DTAs between South Africa and other jurisdictions generally mimic Article 25 of the Organisation for Economic Cooperation and Development’s (OECD) Model Tax Convention on Income and on Capital (Convention), where the OECD has provided a basis for MAP.
Article 25 emphasises that jurisdictions shall endeavour, by mutual agreement, to resolve the situation of taxpayers subjected to taxation that is not in accordance with the Convention. Moreover, Article 25 invites and authorises the parties to the DTA or tax treaty to resolve, by mutual agreement, any problems relating to the interpretation or application of the Convention and to consult together regarding the elimination of double taxation in instances not provided for in the Convention.
The MAP to SARS
The Guide describes that MAP is essentially a special procedure that complements domestic dispute resolution procedures. Taxpayers may refer to the MAP when tax has been charged, or is going to be charged, in spite of the provisions of the relevant DTA or tax treaty in place.
Click here to read more.
This article first appeared on cliffedekkerhofmeyr.com.