Tax Dispute Resolution Mechanisms

Tax Dispute Resolution Mechanisms - Do We Need Alternative Mechanisms Presented by: Prof. Dr. Kovačević Date: 15 February 2024 Introduction - The Search For More Effective Resolution Of Tax Disputes - - BEPS • Stronger fight against aggressive tax planning and international tax avoidance, • Stronger international tax coordination, • More complexity in international taxation This all brings more disputes and makes cross-border tax dispute settlement more important than ever - BEPS 14 - Settling tax disputes at the international level is a qualitatively better option than doing that in each single jurisdiction but - A big influence on domestic field of dispute settlement and vice versa - Dilemmas: • 1. Settling tax disputes /or preventing them • 2. Can we rely on MAPs • 3. Settling tax disputes through non-tax dispute settlement instruments Beyond Implementation of BEPS 14 in the EU - The EU Tax Dispute Settlement Directive goes beyond mere implementation of BEPS 14 in the EU • EU secondary law: CJEU jurisdiction • Protection of rights of the affected persons under EU law from MAP throughout tax arbitration • - Prevention before settlement: use of mediation The impact on non-EU law cross-border tax dispute settlement instruments • EU Arbitration Convention • Tax treaty dispute settlement procedures The Involvement Of Taxpayers In Cross-Border Tax Dispute Settlement - Is there a sufficient degree of transparency in mutual agreement procedures? - Do discretionary powers in the framework of the mutual agreement procedures comply with the Rule of Law? - Food for thoughts • Direct object of mutual agreement procedures and the protection of fundamental rights of the affected persons • National obligations under domestic law of either contracting State • The principles of equivalence and effectiveness Right Of Access To MAP Documents - Right of being heard - Right of defense - EATLP seminal research on tax procedures - Pistone, P. (ed.), Tax procedures, IBFD - Publications, 2020 - • Right to fair administrative and judicial tax procedures • Tax arbitration is an administrative, not a quasi-judicial form of arbitration Several countries unjustly against it: not just for factual disputes, but also not the solution to all problems - Non-final surrender of jurisdiction under tax arbitration The Non-Final Nature Of Tax Arbitration - Growing trend to use baseball arbitration - Differences between - Assessment of merits and shortcomings of baseball arbitration - Focus on motivation and implications for enforcement, • Taking into account the non-final nature of tax arbitration • Increase in the number of international tax arbitrations means a significant increase in the amount of tax revenue affected • Which in turn means that international tax arbitrations will no longer be able to fly below the public and political radar Instead Conclusion - The enhancement of dispute settlement in the international tax field is taking place at a time when - States are reconsidering their consent to international adjudication of trade and investment disputes. - The experience with dispute settlement in international trade and investment over the past two decades suggests that - There are limits to what can and should be asked from the arbitration of international tax disputes. - If tax arbitration decisions are decided against several jurisdictions, concerns about loss of sovereignty are likely to assume greater political salience - Dilemmas and possible answers: • Settling tax disputes/ preventing them - good experiences • We cannot rely only MAPs • Settling tax disputes through non-tax dispute settlement instruments