Corresponding adjustment via MAP — is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the treaty's mutual agreement procedure asks the two authorities to reconcile the adjustment.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Both countries have taxed the same profit — what can I do?
An adjustment in one country raises the profit taxed there. Nothing in that assessment reduces the profit the other country has already taxed, so the same margin is taxed in both places. A domestic appeal cannot cure it, because the authority hearing the appeal has no power over the other country's return; winning it only removes the adjustment, and losing it leaves the double tax intact. The route that can cure it is the mutual agreement procedure in the treaty between the two countries. It asks the two authorities to reconcile the adjustment between themselves, and where they agree, the second country gives a corresponding adjustment that takes the same amount of profit back out of its base.
Does filing an objection protect my time limit for MAP?
No. They are separate clocks and neither one pauses the other. The objection period runs under domestic law from the assessment. The treaty limit for presenting a mutual agreement procedure case runs from the notification of the adjustment, and it is set by the treaty rather than by the assessing authority. A taxpayer who spends the whole domestic window arguing with the auditor can find the treaty window has closed while that was going on. Diarise both dates from the notification, present the treaty case inside its own limit, and then decide separately whether to keep the domestic objection alive as protection while the authorities talk.
What actually is a corresponding adjustment?
It is the mirror image of the assessment, made by the other country. If one authority decides an intercompany price was too low and adds profit to the entity it taxes, the corresponding adjustment removes the same profit from the related entity in the other country, so the group is taxed once on it rather than twice. It is not automatic. The second authority has to accept both that the first adjustment is consistent with the arm's length standard and that it should relieve it, which is exactly what the mutual agreement procedure exists to settle. Until it does, the double tax sits on the group.
Should I accept the assessment before starting a MAP request?
Think hard before signing anything. A domestic settlement can leave very little for the two authorities to negotiate over: the assessing authority may no longer be able to move the figure it has settled, and the other authority may decline to relieve an amount that was agreed rather than determined. Some authorities will not take a case into the mutual agreement procedure at all once it has been settled or decided domestically. The usual practice is the reverse — present the treaty case first, then ask whether the domestic objection can be held in abeyance so that it stays available if the authorities do not reach agreement.
Which country do I file the MAP request with?
Read the article in the particular treaty rather than assuming, because the answer is written there and it is not identical in every treaty. Many follow the pattern of allowing the case to be presented to the authority of the country where you are resident, whichever country made the adjustment. Some allow presentation to either authority. What is common to all of them is that the request has to identify the adjustment, the years, the transactions and the relief sought, and that the other authority will be brought in by your own. Telling both sides what has been filed, and when, avoids a request sitting unacknowledged.
What happens if the two tax authorities never agree?
In many treaties the authorities undertake to endeavour to resolve the case, not to ensure a result, so it is possible for a case to close with the double tax only partly relieved or not relieved at all. Some treaties add an arbitration stage that can be invoked when the authorities cannot settle within the period the treaty sets. That possibility is the reason for keeping the domestic objection alive rather than withdrawing it when the treaty case is presented: if the procedure ends without full relief, the domestic route is the only one left, and it is far harder to revive once abandoned.
What is an intercompany agreement, and do we need one?
It is the contract between the related parties — who does what, who bears which risk, what is charged and on what basis. It matters because when there is no agreement, an auditor prices the transaction from the conduct they can observe rather than from the arrangement you intended, and conduct rarely tells the whole story. Signed agreements that match the invoices and the actual functions are the cheapest transfer pricing protection there is. See our transfer pricing work.
What is OECD Pillar Two?
A global minimum effective tax for large multinational groups, delivered through top-up taxes rather than a single global rate. Where a group's effective rate in a jurisdiction falls below the agreed minimum, the shortfall is collected — by the parent jurisdiction under the income inclusion rule, by the source jurisdiction under a domestic top-up, or as a backstop by other jurisdictions. Canada has enacted implementing legislation. The compliance burden is data, long before it is tax. See BEPS and Pillar Two.
