Tax Alert No. 35 [Revenue Regulation (RR) No. 10-2022 dated 29 June 2022]

Prescribing the Guidelines and Procedures for Requesting Mutual Agreement Procedure (MAP) Assistance in the Philippines

Please be informed that RR No. 10-2022 has been issued to prescribe the guidelines and procedures to be followed by taxpayers who would like to request for MAP assistance from the Philippine Competent Authority (CA) to resolve disputes arising from differences in application or interpretation of the provisions of the relevant Double Taxation Agreement (DTA).

The following are the salient provisions of this RR:

1. A taxpayer may request for a pre-filing consultation with the International Tax Affairs Division (ITAD). If the issues may be resolved through MAP, ITAD shall advise the latter to submit a formal request for MAP assistance. The formal request for assistance should contain and include the information and documentation specified in this RR.
   
2. Subject to the provision of the relevant DTA, the MAP request may be presented to the following:
   1. competent authority of the Contracting State of which he is a resident;
   2. competent authority of the Contracting State of which he is a citizen; or,
   3. if the case falls under the Non-Discrimination article of the DTA - to the Contracting State of which the taxpayer is a national.
      
      If the taxpayer is intending to submit the same MAP request to the other competent authority, the two (2) requests should be submitted at the same time.
3. The MAP request must be submitted within the time limit specified in the applicable DTA. In cases where the DTAs do not provide a time limit, the MAP request must be submitted to the relevant competent authority within three (3) years from the first notification of the action resulting in taxation not in accordance with the provisions of the DTA. The filing period shall be reckoned from the date of receipt of the Final Assessment Notice or of a ruling denying the claim for treaty benefit, or any equivalent
   document which contains the action that results in double taxation.
   
4. A MAP request may be filed manually to the competent authority or his/her authorized representatives, or electronically via an encrypted mail. The fees associated with the negotiation of bilateral or multilateral advance pricing arrangements (APAs) or with the hiring of independent experts or mediators, shall be shouldered by the party initiating the MAP request. In all other cases, no fees shall be charged by the competent authority for the resolution of MAP cases.
   
5. The details of the following steps in the MAP process are specified in Section 6 of the RR:
   1. Preliminary Assessment
   2. Analysis of a MAP Case
   3. Consultations between the MAP Team and other offices of the Bureau of Internal Revenue
   4. Consultations between the Competent Authorities
   5. Negotiation of Bilateral or Multilateral APAs
   6. Authority of the MAP Team
   7. Resolution of a MAP Case
   8. Competent Authority Agreement
   9. Timely implementation of MAP Agreements
   10. Competent Authority Agreement has not been reached
   11. Interaction with Domestic Remedies
       1. Judicial or other administrative appeals versus MAP
       2. Court decisions cannot be overruled through MAP
       3. Effect of decisions rendered by foreign courts
       4. Suspension of Tax Collection
   12. Withdrawal of a MAP Case
   13. Appropriate Transfer Pricing Adjustment under the DTAs
        
6. Audit settlements reached between the tax authority and the taxpayers do not preclude access to MAP. If a MAP request has been initiated after such audit settlement, the Philippine CA should independently consider whether such settlement would result in taxation not in accordance with the provisions of the Convention.

You may access the full version of the RR through the BIR website.