In view of the resolution of the MAGP, Part VI of the MLI (Articles 18 to 26 inclusive) deals with the mandatory conciliation of POPs cases. Several jurisdictions committed, at the time of the final report, to introduce mandatory POPs arbitration in their bilateral tax treaties. This section is practically optional. There are clear and often long deadlines within which the MAGP can be requested. In particular, the second sentence of Article 16(1) of the MLI provides that the POP case must be brought within a specified period, that is to say, less than three years from the first declaration of the tax action, and not in accordance with the provisions of a classified tax convention. This means that taxable persons cannot submit their case within three years of the first notification of the appeal leading to taxation, in accordance with the provisions of the covered tax treaty. The first communication is generally considered to be the definitive taxation at the end of a tax application or similar. Some may argue that the advantage of an arbitration procedure lies in the fact that the existence of this mechanism provides an incentive for Member States to settle disputes before the expiry of the two-year period, which would be a success rather than a failure of the convention. However, the statistics also show that 202 cases had exceeded the two-year period, although it had been cancelled with the agreement of the taxable person. This indicates that taxable persons do not always consider the arbitration procedure available to them under the Convention as a desirable means of settling double taxation.
Even when an arbitration procedure is sought, the EU review found that there may be many shortcomings in the system, including the delay or absence of the creation of the Advisory Committee and the lack of agreement on the appointment of the Chair of the Advisory Committee, which delays or prevents the process. In order to avoid double taxation resulting from possible actions of the tax administrator of another State in the context of the future audited transaction, it is advisable to request, through the request, the approximation of the pricing principles of controlled future transactions and the conclusion of the agreement with the competent authority of another foreign State. in accordance with the provisions of the tax convention applicable between the Republic of Lithuania and another State for the avoidance of double taxation of income and capital. When the request is submitted, the mutual agreement procedure may be initiated in accordance with the procedure laid down in the acts. The Mutual Agreement Procedure (MAP) (also known as the Competent Authority Procedure (CAP)) is an administrative procedure intended to help resolve difficulties arising from the following problems: The OECD is an important instrument for the OECD`s ability to implement Action 14. The MLI is practically a multilateral treaty that allows legal systems to rapidly amend their bilateral tax treaties in order to implement the relevant recommendations of the OECD and G20 BEPS package. As OECD Secretary-General Angel Gurria said, ”MLI not only improves corporate security and predictability and a more efficient international tax system for the benefit of our citizens, but also greater security and predictability.” The mutual agreement procedure (MAGP) remains the most widely used and effective means of eliminating double taxation. . . .