Mutual Agreement Procedure in Malta: Understanding the Process
The Mutual Agreement Procedure (MAP) is a dispute resolution process established by tax treaties, including the Malta tax treaty network, to resolve issues of double taxation and taxation that is not in accordance with treaty provisions. The MAP procedure is an important tool for taxpayers who face dual taxation and requires close collaboration and communication with tax authorities to reach a mutual agreement.
Malta has an extensive network of double taxation agreements (DTAs) with over 70 countries worldwide, including all the EU member states. These treaties provide for the allocation of taxing rights between Malta and its treaty partner countries, and seek to eliminate double taxation by allowing taxpayers to claim relief.
However, despite the provisions in these agreements, there may be instances where taxpayers face issues of double taxation or conflicting interpretations of the treaty provisions. In such cases, the MAP procedure can be invoked to resolve the dispute, allowing for an amicable solution to be reached between the taxpayer and tax authorities.
The MAP procedure is initiated by the taxpayer by submitting a written request to the competent authority, which in Malta is the Commissioner for Revenue. The request should provide details of the taxation issue, the relevant tax treaty provisions, and the efforts taken to resolve the issue through domestic procedures. The Commissioner for Revenue will then forward the request to the competent authority of the treaty partner country.
The competent authorities of both the treaty partner countries will then engage in discussions to reach a mutual agreement. The discussions will be conducted on a without prejudice basis and will involve the exchange of information and views, as well as the sharing of technical expertise. The aim of the discussions is to resolve the issue in a timely and efficient manner, and to seek a solution that is in line with the treaty provisions.
It is important to note that the MAP procedure in Malta is subject to strict time limits. The competent authority must initiate consultations within three years of the first notification of the action resulting in taxation not in accordance with the treaty provisions. The consultation must then be concluded within two years of the date of initiation.
In conclusion, the MAP procedure is an important tool in resolving issues of double taxation and conflicting interpretations of tax treaty provisions. It requires close collaboration and communication between the taxpayer and tax authorities, and seeks to reach a mutually agreeable solution that is in line with the treaty provisions. As a professional, it is important to understand the significance of the MAP procedure in Malta and its implications for taxpayers and businesses operating across borders.