Cosmos International Management Co., Ltd.

News (September 15, 2011)

NTA partially revised administrative guidelines on the mutual agreement procedures

National Tax Agency (ANA) announced the partial revision of gCommissionerfs Directive on Mutual Agreement Procedures (MAP)h (gMAP Directiveh) on September 7.

The main point of the revision is that rules of arbitration proceedings are added. Arbitration is a system that if a cross-border double taxation case being discussed under MAP is unsolved for a certain period of time, a taxpayer can leave the solution to an arbitration panel which is neutral from both countries. As an arbitration clause was added to the OECD Model Tax Treaty (Article 25), Japan also introduced the arbitration clause in the revised Double Tax Treaty with Netherlands (signed in August 2011) and the new Double Tax Agreement with Hong Kong (signed in November 2010, executed in August 2011), and is expected to conduct the same revision for double tax treaties with other major countries. Therefore, administrative procedures about arbitration will occur inevitably in the future. However, arbitration proceedings have not actually started yet, so that additions and revisions may be expected after actual operations of arbitration proceedings start.

In addition, followed by the NTAfs prior announcement as of July 22, 2011 that the MAP application form should directly be delivered to the Office of MAP, not the current address of local tax office, the administrative procedures in the MAP Directive have accordingly been revised.

The revision will be effective from October 1, 2011.


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