International Tax Arbitration

Abstract:     
Cross-border tax disputes are usually channelled through the "mutual agreement procedure", an informal negotiation between the tax authorities of the states involved. Arbitration has been suggested as an alternative, and is starting to be instituted. Arbitration will probably be a good "stick" against over-long mutual agreements, but it also seems to exhibit "carrot" features, such as finality, independence and greater taxpayer support. This article describes the developments and analyses the options that countries face. In the Australian context, the transfer pricing litigation environment and the FIN 48 accounting standard are considered, and the author calls on the Australian government to invite submissions on the prospect of arbitration clauses in Australia's tax treaties.

Number of Pages in PDF File: 19

Keywords: tax law, international tax, tax treaties, double tax agreements, double taxation, dispute resolution under tax treaties, arbitration of tax treaty disputes, transfer pricing, mandatory arbitration, OECD model treaty, mutual agreement procedure, Australian mutual agreement procedure data

JEL Classification: E62, H20, H71, K34, K30

Accepted Paper Series