2. Mutual Agreement Procedure Statistics for 2014 The statistics for each reporting period (generally a calendar year) include: opening inventory of MAP cases on the first day of the reporting period; number of MAP cases initiated during the reporting period; number of MAP cases completed during the reporting period; ending inventory of MAP cases on the last day of the reporting period; cases closed or withdrawn with double taxation during the reporting period; and average cycle time for cases completed, closed or withdrawn during the reporting period. 2

3. Countries with the highest number of new MAP cases in 2014 Source: OECD CountryNumber of new cases Germany374 United States354 Belgium205 France 201 Canada127 United Kingdom117 Luxembourg116 Switzerland109 Sweden91 Italy 89 3

4. Four Key Objectives to be achieved  No Obligation to resolve MAP cases. CAs of both the states are required to only seek a solution and are not obliged to find one. Now it is proposed that CAs undertake and resolve MAP cases-Amendment to commentary suggested - but it will have more weight if Model Convention is also amended. 4

5.  Absence of Article9(2) of OECD-MC in treaties. MAP Process with respect to TP disputes not resolved through corresponding adjustments unless Article 9(2) exists in treaties. Economic double taxation not in accordance with object and purpose of tax treaty – hence, though the Article 9(2) is absent relief must be given. Some states view that unless Article 9(2) is available in treaty the relief cannot be given. It is proposed to adopt Article 9(2) of OECD-MC through multilateral instrument (Action 15) 5

6.  Lack of independence and lack of resources CA should not be from the field staff implementing the law. CA must be independent. Lack of resources compel CA to play dual role. Appropriate body is FTA MAP Forum, under the guidance of FTA Commissioners.  Audit settlements as an obstacle to MAP access Many a time tax authorities force tax payers to settlements. This will push taxpayer leave the choice of MAP. Transparency of audit settlements necessary to find out whether any coercion for agreeing settlements by tax payers. Objective 2: Ensure that administrative processes promote the prevention and resolution of treaty related disputes. 6

7.  Lack of APA programs Bilateral APA programs to be promoted. -Unilateral APAs would not address relief of economic double taxation. - roll back of APAs in appropriate cases should be allowed 7 Objective 2: Ensure that administrative processes promote the prevention and resolution of treaty related disputes.

8.  The concern or obstacle in accessing MAP. Procedure and guidelines not transparent Unduly complex  Transparent and simplified procedures for accessing MAPs should be publicized and should be accessible. The CAs office and other contact details must be made public.  Procedural documentation requirements for accessing the MAP should be made public. Objective 3: Ensuring that taxpayers can access the MAP when eligible 8

9.  Central depository by OECD giving information on all states in respect of MAP issues.  MAP settlements should be made public in terms of issues while protecting the confidentiality of sensitive taxpayer information.  should provide precedential status to MAP settlements. 9 Objective 3: Ensuring that taxpayers can access the MAP when eligible

10. Objective 4: Ensuring that cases are resolved once in the MAP  In order to ensure resolution of disputes a time bound mechanism including mandatory binding arbitration proposed. Arbitration has been included in OECD Model in 2008. Number of countries agreed to this. Some of other countries like India strongly opposed.  Three main concerns for opposing binding arbitration. Issue of Sovereignty  States interest can be best safeguarded if decisions of tax administration is scrutinized by their own judicial courts.  UN committee also observes that certainty of state tax policy is critical and unsolved tax disputes deter investors from entering the country. 10

11. The scope of and access to arbitration.  Restricting the scope of cases before MAP is undesirable.  Denying access to MAP in cases where domestic anti abuse provisions apply also defeats MAP mechanism. Coordination between MAP arbitration and domestic legal remedies.  In case there is a court decision on a particular issue access to MAP is not allowed.  If MAP is to be pursued legal proceedings must be suspended.  OECD/UN Model Article25 suggests where unresolved issues between CAs may be submitted to arbitration if domestic legal remedies are no longer available. 11 Objective 4: Ensuring that cases are resolved once in the MAP

12. MAP Statistics – Latest position of India  100 Transfer pricing disputes resolved under MAP procedures with USA between January 2015 and January 2016. As per US-India Framework Agreement. Prior to this framework agreement there was lot of delay in disposing off cases. Now it is conducive to enter into bilateral APAs also.  Highest political and diplomatic efforts resulted in framework agreement.  Robust APA program coupled with MAP program would help boosting US investments into India.  Most of the TP disputes arose in IT/ITES industry. 12

13. MAP Statistics – Latest position of India  India also signed a MAP in the manufacture sector in 2015 with Japan.  India signs two bilateral APAs with UK for management charges and brand royalty.  Press release from CBDT dated 16 th February 2016 confirms that MAP cases to the tune of RS. 5000 crore, has been resolved.  From 1st April 2014 to 16th February 2016 around 180 cases have been resolved under MAP involving Rs. 5000 crore value of tax disputes. Industry sectors like IT/ITES, manufacture, consultancy services etc. The countries with which cases resolved are USA, Japan,UK and China. 13