Canada adjusted our transfer price — will the other country reduce its profit too?
Not automatically. An adjustment in one country raises the profit taxed there; it does nothing to the return already filed in the other country. Unless that second authority makes a matching downward adjustment, the same profit is taxed twice. The treaty's mutual agreement procedure is the mechanism for asking the two authorities to reconcile the adjustment between themselves. It is a request made to both competent authorities, not an appeal against the assessment, and it is the only route that can move the number in the other country.
Should I file an objection or go straight to MAP?
Usually both, because they do different work. The domestic objection disputes whether the adjustment in this country is right. The mutual agreement procedure asks the two authorities to reconcile the adjustment so that the profit is not taxed twice. Winning the objection outright removes the problem; losing it leaves the double tax exactly where it was. The two also run on separate clocks, so the sensible order is to preserve the domestic position and open the treaty route in parallel, rather than treating one as a fallback for the other.
Can a domestic appeal fix double taxation on its own?
No, and this is the point most often missed. An appeal can only change one country's number. If it succeeds the adjustment shrinks or disappears; if it fails the profit remains taxed in both places, because the other country's return is untouched by a decision made under the first country's domestic law. Only the treaty route reaches the second authority. So the question to settle early is not simply whether the adjustment is defensible, but which of the two authorities is being asked to move, and under which procedure.
We missed the objection deadline — is MAP still available?
Possibly. The mutual agreement procedure has its own time limit, and that limit runs from the notification of the adjustment rather than from the domestic objection clock. They are different dates measured from different events, so one expiring does not decide the other. The first task is evidential: fix the date on which the adjustment was actually notified, from the assessment and the correspondence around it, and read the time limit in the particular treaty against that date. Guessing the date is how a live claim gets abandoned.
Who applies for MAP, the parent company or the local subsidiary?
The procedure is between the two competent authorities, but it has to be triggered by the taxpayers affected in their own countries. In practice that means a coordinated pair of submissions describing the same transaction, the same functional analysis and the same figures, rather than one letter from the group. If the two submissions describe the business differently, the authorities notice. The group decides who holds the pen; the requirement is that both files reconcile to each other and to the statutory accounts on both sides.
What does the other tax authority want to see in a MAP case?
The same things the adjusting authority looked at, presented so they can be checked. Who does what in each entity, who carries which risk, which method was applied and why, and how the intercompany invoices tie back to the audited accounts. A submission that asserts a conclusion without that trail gives the second authority nothing to agree with. Where the documentation is thin, the honest course is to say what the evidence supports and identify the gaps, because a position that cannot be reconciled to the ledgers will not survive two reviewers.
Do I have to file in both countries?
Frequently yes, and the two filings do different jobs. The country where the income arises taxes it at source; the country where you are resident taxes your worldwide income and then gives credit for the tax already paid. Filing only one side is what leaves relief unclaimed — the credit has to be asked for on a return. We prepare both sides so the numbers agree. See dual filing.
Which countries have a tax treaty with the United States?
Around sixty, including Canada, the United Kingdom, India, Australia and most of western Europe — but the list matters less than the terms, because each treaty caps rates and allocates income differently. Two countries with treaties can produce opposite answers on the same pension or the same royalty. What decides your position is the specific article covering your income type. See our country guides.
