In a recent accolade from the Organization for Economic Cooperation and Development (OECD), the Netherlands has been recognized for its commendable handling of transfer pricing (TP) cases in 2022. The prestigious Mutual Agreement Procedure (MAP) awards, conferred by the OECD, acknowledge the efforts of competent authorities in swiftly and effectively resolving TP disputes.
Among jurisdictions that closed more than 50 TP cases in 2022, the Netherlands emerged as a standout performer, boasting the shortest average time to close cases at an impressive 19.62 months. This achievement outshone other notable countries, with Switzerland following at 21.34 months, Denmark at 22.03 months, Germany at 25.37 months, and Spain at 25.85 months.
The OECD's evaluation considered TP cases received before or after January 1, 2016, or January 1 of the year that the jurisdiction joined the BEPS Inclusive Framework. The Netherlands' recognition reflects its commitment to expeditiously resolving TP cases, contributing to a more efficient and cooperative international tax environment.
In addition to the award, the OECD released comprehensive MAP statistics for 2022. The data revealed that MAP cases took an average of 25.3 months, reflecting a slight improvement from the previous year's average of 26 months. The organization commended the positive results, indicating that, despite an increasing number of MAP requests from taxpayers, competent authorities are rising to the challenge through enhanced resources and improved case management.
The OECD underscored that, while there is room for improvement, the results highlight the significant investments made by jurisdictions in strengthening their competent authority functions amid growing constraints on resources. Notably, approximately 73% of the MAPs concluded in 2022 fully resolved the issues, maintaining a similar rate to the previous year.
In a separate category, among jurisdictions that closed more than 20 cases in 2022, New Zealand secured the OECD MAP award for the shortest average time for non-TP cases, boasting an average of 6.36 months. This achievement positions New Zealand ahead of other noteworthy countries, with Ireland following at 7.6 months, Portugal at 11.42 months, the UK at 11.68 months, and Luxembourg at 13.26 months.
The OECD also highlighted a positive trend in the duration of TP cases, which took an average of 29 months to close in 2022, down from 32.3 months in 2021. This marks the first time the average duration has fallen below the 30-month threshold. Notably, approximately 0.5% fewer TP cases were closed in 2022 compared to the previous year.
The MAP awards from the OECD underscore the global efforts to streamline and expedite the resolution of transfer pricing disputes, emphasizing the commitment of jurisdictions to foster a more effective and responsive international tax framework. The Netherlands' recognition further positions it as a leader in navigating the complexities of international tax regulations.
By fLEXI tEAM