The UAE Ministry of Finance (MoF) has issued mutual agreement procedure (MAP) guidance for tax treaties. The MAP guidance aims at facilitating taxpayers' access to effective and expedient dispute resolution mechanisms under bilateral tax treaties and includes information on how a MAP request should be initiated, to whom it should be presented and what information should be included in the request.
The guidance is in line with the United Arab Emirates' commitment to the Base Erosion and Profit Shifting (BEPS) Action 14 minimum standard as a member of the BEPS Inclusive Framework (BEPS IF). The MAP guidance provides details as follows:
MAP description
This section explains the MAP and that it is designed to:
- relieve double taxation typically arising from transfer pricing cases;
- resolve treaty-related tax disputes and issues in interpreting or applying a tax treaty; and
- provide a bilateral mechanism for MoF to engage with the competent authority of another Contracting State.
Conditions for requesting the MAP
MAP requests will only be accepted if:
- the issue or transaction relates to a jurisdiction with which the United Arab Emirates has concluded a tax treaty;
- it is apparent that the actions of one or both jurisdictions resulted in or will result in taxation not in accordance with the treaty; and
- the taxpayer notifies the MoF within the time limits specified in the applicable treaty.
The MAP request should meet the following minimum requirements:
- identity of the taxpayer(s) covered in the MAP request;
- the basis for the request;
- facts of the case;
- analysis of the issue(s) requested to be resolved via MAP;
- whether the MAP request was also submitted to the competent authority of the other treaty partner;
- whether the MAP request was also submitted to another authority under another instrument that provides for a mechanism to resolve treaty-related disputes;
- whether the issue(s) involved were dealt with previously; and
- a statement confirming that all information and documentation provided in the MAP request is accurate and that the taxpayer will assist the competent authority in the resolution of the issue(s) presented in the MAP request by providing any complementary information or documentation required by the competent authority in a timely manner.
Timeline for MAP requests
MAP requests can be issued in English or Arabic to: Mr Abdalla Al Obaidli, Director of International Organizations and Financial Relation Email: aaalobaidli@mof.gov.ae.
Once the MAP request is submitted, the MoF will consider the request and may ask the taxpayer for further information if required. Then, the MoF will initiate the consultation with the treaty partner in order to reach an agreement. The timeline to resolve the MAP is provided by the following table:
| No. | Action | Time limit |
|---|---|---|
| 1 | the MoF will notify the taxpayer of receiving the request | within 30 days of the taxpayer initiating the MAP request |
| 2 | the MoF will notify the correspondent competent authority about the request | |
| 3 | the MoF requests further information/documentation from the taxpayer | the taxpayer will be given 30 days to provide any requested information/documentation |
| 4 | the MoF will determine the eligibility of the MAP request and notify the taxpayer, in writing setting out its reasons, if the case is accepted or rejected | within 30 days after the necessary information or documentation is provided to the MOF |
| 5 | (if accepted) a proposal is sent to the other competent authority to start MAP discussions by issuing a notification letter to them | |
| 6 | the MoF will regularly update the Taxpayer on the progress and the outcome of the competent authority's negotiations | in general, the MoF aims to resolve MAP cases within 2 years of receiving the taxpayer's application |
| 7 | when an agreed outcome is reached between the MoF and the relevant foreign competent authority | the MoF will write to inform the taxpayer within 30 days of reaching a mutual agreement and advise the taxpayer on the next course of action. The taxpayer will have to decide whether the agreed outcome is acceptable |
| 8 | taxpayer's approval of mutual agreement in writing | to be submitted immediately after conclusion of mutual agreement. 30 days deadline to respond |
| 9 | confirmation of mutual agreement with terms and conditions: exchange of closing letters | as soon as possible after acceptance of mutual agreement by taxpayer |
| 10 | implementation of mutual agreement | no later than 90 days after exchange of closing letters |
Legal basis
This section provides that the MoF relies on the direct applicability of MAP articles in its tax treaties, as tax treaties, once in force, override all other domestic laws (other than the Constitution). It explains the possible outcome of the MAP request and the role of each competent authority in case of acceptance or rejection of the MAP request.
If both competent authorities successfully resolve a MAP case, they would formalize a mutual agreement amongst themselves at the earliest time possible. However, if both competent authorities were unable to resolve a MAP case, they would close the MAP case as unresolved.
Timeframe for resolving and implementing MAP cases
This section explains that most treaties concluded by the United Arab Emirates include a MAP. A taxpayer has to request its case to be reviewed in a MAP within 3 years from receiving the first notification of an action that it considers to subject it, or is likely to subject it, to tax not in accordance with a treaty (i.e. the time limit for submitting a MAP request will usually start from the first notification of the action which gives rise to taxation not in accordance with a treaty). However, there is no time limit pursuant to the treaty concluded with Turkey.
If the taxpayer makes a MAP application to the competent authority either of the United Arab Emirates or of the treaty partners after the time period expiration specified in the article relating to the MAP of the relevant treaties, the UAE competent authority will not provide access to MAP.
The UAE Ministry of Finance (MoF) published the MAP guidance (dated 7 January 2021) on its official website on 8 June 2021.