20 March 2024 US IRS official discusses benefits of mandatory arbitration on MAP Nicole Welch, IRS's Large Business and International (LB&I) Division Director of Treaty and Transfer Pricing Operations, said the United States encourages jurisdictions to pursue mandatory binding arbitration to strengthen their mutual agreement procedure (MAP) programs.1 Speaking on March 7, 2024, at a Global International Fiscal Association program in Washington DC, Welch said mandatory binding arbitration is the US tax treaty policy.2 Mandatory binding arbitration is included in the 2016 US model tax treaty and the bilateral US income tax treaties with Belgium, Canada, Croatia,3 France, Germany, Japan, Spain and Switzerland.4 MAP disputes can be brought to an arbitration panel if the parties agree to arbitration and fulfill certain requirements. Mandatory arbitration in MAP is baseball style, or final-offer arbitration, meaning that each party puts forth its final position and one position is chosen by the arbitration panel. The successful party in arbitration is the one that submits a more reasonable offer. Arbitration can help to more efficiently reach a MAP settlement because competent authorities might be more willing to negotiate before arbitration to avoid an all-or-nothing settlement.
Document ID: 2024-0637 | ||||||
