The OECD on 31 October released the 2024 Mutual Agreement Procedure Statistics | OECD, providing a comprehensive view of how jurisdictions resolve cross-border tax disputes and prevent double taxation.
This latest data release shows the continued importance of the mutual agreement procedure (MAP) in settling disputes globally, with 1,265 transfer pricing cases started during 2024 and 1,119 closed.
The outcomes for taxpayers were generally positive, with 75.7% of transfer pricing cases in the year reaching a resolution that fully eliminated double taxation, an increase from 71% the prior year. Of the remaining cases, a further 12.5% achieved partial or domestic relief.
The time to process a transfer pricing MAP case went down slightly, from a prior year average of 32 months to slightly under 31 months. This is still a long time for taxpayers to suffer double taxation, but quick in comparison with the average length of time to conclude an advance pricing agreement (APA), which in the UK is 53 months.
The results also show a slight increase in case inventory, with transfer pricing cases up by 3.9% and other cases by 2.7%.
The big increases in caseloads appear to be driven by Germany and Spain, where the number of cases ticked up significantly during 2024, while India had a similar number of MAP requests in 2024 as it did in 2023, less than half of its 2020 peak.
APA Statistics
On the same day, the OECD also released the 2024 APA Statistics, which revealed that the use of bilateral APAs continues to expand as a key tool for dispute prevention. According to the report, 80 jurisdictions reported allowing bilateral APAs, up from 73 in 2023, with 49 actively managing cases. The number of bilateral APAs filed rose by 3% in 2024, and approximately a quarter of the inventory was closed,
On a less positive note, the average time to completion for an APA increased from 36.8 months in 2023 to 39.6 months in 2024.
UK Statistics
The data published in the OECD report is on a calendar-year basis, so it provides an update on UK statistics compared to the FY24 tax year information published by HMRC in January.
Spain and Germany, closely followed by France, continued to be the UK’s principal MAP partners. The overall picture for the UK was relatively stable, with 130 transfer pricing cases started and 113 cases closed, with a relatively swift 26-month average completion time. UK cases had a higher-than-average rate -- 84% -- of cases in which double taxation was fully eliminated, and only 7% of cases closed without any relief.
The statistics convey a clear message: taxpayers seeking relief from double taxation on transfer pricing matters through the MAP process have achieved a fair amount of success. And with an average time to completion of only two years for UK parties, this is clearly an area to explore for groups that have suffered a material transfer pricing adjustment.
Given that we expect to see a substantial increase in the number of transfer pricing challenges from HMRC going forward, it may be important to keep this option in mind.
Andrew Stewart
BDO in United Kingdom