In December 2019, a European directive was transposed into Luxembourg`s tax legislation. The directive concerns mechanisms for resolving tax disputes in order to guarantee legal certainty and achieve fairer taxation in the EU. If the taxpayer accepts the solution presented, he is asked to refrain from any administrative or judicial recourse involving both the content and the form of the taxation at issue, in order to avoid any risk of a double exemption. A proposal for accommodation in the case of a contradictory adjustment procedure In most cases, a POP may be requested if the subject « considers that the actions of one or both contracting states lead to a double taxation that does not comply with the provisions of this Convention. » Unlike the IMLI, Luxembourg law provides a single framework for resolving tax disputes when other EU Member States are involved. Compared to the EU Arbitration Convention, the new framework is seen as more effective, particularly in terms of access to POPs, the duration of the procedure and the time it takes to complete it. Overall, it is clear that the MLI extends taxpayers` access to three years, both in terms of extending the period during which taxpayers must initiate a POB period, provides an effective two-year period for the relevant authorities to resolve a case (after that date, it may be subject to arbitration). The MLI has led to a greater homogeneity of approach on key issues such as arbitration and, above all, the adoption of a single map article for covered tax treaties. The taxpayer has not provided concrete evidence of double taxation The Mutual Agreement Procedure (MAP) remains the best way to eliminate double taxation. The effective use of PPIs by different instruments has been of interest to the OECD and the EU for more than 20 years. According to bePS, the number of double taxes is increasing and the number of POPs continues to increase.
There is a growing emphasis on ensuring better dispute resolution techniques to more effectively eliminate double taxation. This article describes some of the features of the instruments currently available. The subjects may, subject to the time frames set out in the DBA concerned, seek a solution to the double taxation issues that are repeated over several tax years. The arbitration agreement also allowed the subjects to present a case to each of the Member States concerned within three years of receiving the first notification of the measure that led to double taxation. In some cases, this has allowed cases to be presented that would not otherwise have been relevant under the bilateral contractual deadlines that existed at the time. The IRAS recognizes the importance of tax security in the rapidly changing business environment and is committed to helping taxpayers resolve tax disputes consistently and principledly, in accordance with recognized international tax rules and principles. When a Singapore tax subject is subject to double taxation as a result of adjustments made either by the IRAS or by a foreign certification body to transfer prices for its transactions with related parties, it may apply to the IRAS to resolve the double taxation through a MAP. For more information, see the Map profile of Singapore (595 KB). Singapore has been peer-reviewed at Level 1 within the OECD/G20 Base Erosion and Profit Shifting Project (BEPS) – Action 14. The « peer review report, » which reflects the results of Singapore`s assessment of the implementation of Minimum Standards of Action 14 (accompanied by a « best practice report » on the implementation of best practices in Singapore), was published on 12 March 2018. These reports are available on the OECD website.
In particular, Article 19 of the compulsory arbitration procedure must be mandatory if the competent authorities are unable to reach an agreement on the settlement of a case within two years of their start.