MAP: The Mutual Agreement Procedure for Double Tax Relief

Definition

The MAP — the mutual agreement procedure — is the [treaty] procedure under which the two competent authorities (the two treaty-partner countries’ tax authorities) negotiate an agreement to eliminate the double taxation that the DTA allocation leaves (the residual double — the attribution the disagreement (the two states disagree on the [PE] (/docs/glossary/permanent-establishment)’s attributed profits), the characterization the dispute (the royalty vs the business profits the different the tax), the TP adjustment the correlative relief the unresolved (the one state’s [adjustment] the two-sided adjustment the other state’s correlative the not-granted)). The MAP is the DTA’s dispute mechanism (the treaty‘s article — the Mutual Agreement article, the OECD Model’s Article 25, the DTA’s MAP article): the residence state’s request (the taxpayer’s competent authority the map request the submission), the source state’s response (the two authorities’ negotiation the agreement the double‘s elimination), and the adjustment (the agreement the states’ adjustments — the primary adjustment (the one state’s change), the correlative adjustment (the other state’s correlative the double’s eliminated)). The India procedure: the MAP and DTAs in India guide carries the India mechanics (the Rule 90A–90B of the Income-tax Rules, the India’s MAP procedure, the application the residence state (India) or the competent authority the source, the timelines, the practical outcomes). The TP team’s MAP questions: the trigger (the TP adjustment the correlative relief the denied — the double the MAP’s trigger), the evidence (the Local File the benchmark the adjustment’s basis — the MAP’s negotiation the evidence the defence), and the correlative relief (the [two-sided adjustment] (/docs/glossary/two-sided-adjustment) the correlative the MAP’s outcome — the double the eliminated).

The MAP, in one negotiation:
  1. The trigger (the double taxation the DTA allocation leaves — the attribution disagreement, the characterization dispute, the TP adjustment’s un-granted correlative)
  2. The request (the residence state’s competent authority — the taxpayer’s MAP application, the submission)
  3. The negotiation (the two competent authorities — the agreement the double’s elimination)
  4. The adjustment (the primary + the correlative — the double eliminated, the outcomes the states’ adjustments)

The element	The content
The trigger	The residual double taxation (the DTA allocation leaves) — the attribution disagreement (the PE’s attributed profits), the characterization dispute (the royalty vs the business profits), the TP adjustment’s un-granted correlative relief
The request	The residence state’s competent authority — the taxpayer’s MAP application (the submission, the evidence, the Local File the basis)
The negotiation	The two competent authorities (the two treaty-partners’ tax authorities) — the negotiation the agreement the double’s elimination
The adjustment	The primary adjustment (the one state’s change) + the correlative adjustment (the other state’s correlative) — the two-sided adjustment the double’s eliminated

The working read (the MAP and DTAs in India guide): the MAP is the DTA’s dispute mechanism (the treaty‘s Mutual Agreement article, the OECD Model’s Article 25, the DTA’s MAP article — the two competent authorities’ negotiation the double’s elimination). The India procedure (the Rule 90A–90B of the Income-tax Rules): the application (the residence state — India — the competent authority the India authority, the source state the other authority), the submission (the MAP application the evidence — the Local File the benchmark the adjustment’s basis), the timelines (the application the deadline, the negotiation the period, the agreement the adjustment the implementation), and the practical outcomes (the agreement the adjustments — the primary (the one state’s change), the correlative (the other state’s correlative), the double the eliminated). The TP team’s standing questions: the trigger (the TP adjustment the correlative relief the denied — the double the MAP’s trigger, the audit the adjustment the correlative the unresolved), the evidence (the Local File the benchmark the adjustment’s basis — the MAP’s negotiation the evidence the defence, the [defending the matrix] (/docs/benchmarking/defending-accept-reject) the negotiation’s file), and the correlative relief (the [two-sided adjustment] (/docs/glossary/two-sided-adjustment) the correlative the MAP’s outcome — the double the eliminated, the adjustment the correlative the granted).

Example

An Indian enterprise (the residence: India) with a PE in Jurisdiction J (the source): J makes a TP adjustment (the PE’s attributed profits the increased — J’s tax the attributed profits the raised). India’s position: the adjustment not agreed (the PE’s attribution the disagreement, the adjustment the not-granted correlative — the enterprise’s profit the double (J’s tax the attributed, India’s tax the unadjusted — the same profit, the two taxes)). The MAP (the double’s resolution):

The step	The MAP
The trigger	The TP adjustment (J’s) the correlative relief (India’s) the denied — the double the MAP’s trigger
The request	The enterprise’s MAP application to the India competent authority (the residence state) — the submission (the Local File, the benchmark, the adjustment’s basis)
The negotiation	The India and J competent authorities — the negotiation the PE’s attribution the agreement (the attributed profits the agreed, the adjustment the agreed)
The adjustment	The primary (J’s adjustment the agreed the attributed profits) + the correlative (India’s correlative — the enterprise’s Indian tax the reduced the J tax the accounted) — the two-sided adjustment the double the eliminated

The outcome: the double eliminated (the enterprise’s profit the taxed once — the J tax on the agreed attributed profits, the India tax correlatively adjusted), the MAP the agreement the record (the competent authorities’ agreement the file’s section, the adjustments the implemented) — the [MAP guide] (/docs/jurisdictions/india-map-dtt) the India procedure (the Rule 90A–90B, the timelines, the practical outcomes).

See also

• MAP and DTAs in India
• DTA (Double Taxation Agreement)
• Two-Sided Adjustment
• Permanent Establishment (PE)

FAQ

What is the MAP, and when is it triggered? The MAP (the mutual agreement procedure) is the DTA’s dispute mechanism: the two competent authorities (the treaty-partners’ tax authorities) negotiate the agreement the double taxation’s elimination — the treaty’s Mutual Agreement article (the OECD Model’s Article 25, the DTA’s MAP article). It is triggered by the residual double (the DTA allocation leaves): the attribution disagreement (the PE’s attributed profits the two states disagree), the characterization dispute (the royalty vs the business profits the different the tax), or the TP adjustment the correlative relief the denied (the one state’s [adjustment] the other state’s correlative the not-granted — the double the MAP’s trigger). The [MAP guide] (/docs/jurisdictions/india-map-dtt) the India procedure (the Rule 90A–90B, the application, the timelines).

What is the India MAP procedure — the Rule 90A–90B? The MAP and DTAs in India guide carries it: the Rule 90A–90B of the Income-tax Rules, 1962 — the India’s MAP procedure (the application the residence state — India — the competent authority the India authority, or the source state the other authority; the submission the MAP application the evidence — the Local File the benchmark the adjustment’s basis; the timelines the application the deadline, the negotiation the period, the agreement the adjustment the implementation; the practical outcomes the agreement the adjustments — the primary, the correlative, the double the eliminated). The DTA network (India’s treaties the treaty partners, the MAP article the treaty’s mechanism) is the context — the MAP guide the India procedure, the DTA network, the timelines.

What is the correlative relief, and why is it the MAP’s outcome? The correlative relief (the [two-sided adjustment] (/docs/glossary/two-sided-adjustment)) is the other state’s correlative adjustment — the one state’s [TP adjustment] (the primary — the attributed profits the increased, the tax the raised) the other state’s correlative (the enterprise’s tax in the other state the reduced — the profit the not double-taxed). The MAP’s outcome is the correlative relief (the agreement the two adjustments — the primary (the one state’s change) + the correlative (the other state’s correlative) — the two-sided adjustment the double the eliminated). The TP team’s question: the correlative relief the denied (the one state’s adjustment the other state’s correlative the not-granted — the double the MAP’s trigger) — the MAP the correlative the granted, the double the eliminated (the MAP guide the India procedure, the two-sided adjustment the outcome).