MAP is a procedure that allows the Competent Authorities or designated representatives of the Competent Authorities from the governments of the Contracting States/Jurisdictions to interact with the intent to endeavour to resolve international tax disputes.
MAP is provided for in an Article in a Double Taxation Agreement (DTA) and can involve disputes arising from juridical double taxation and economic double taxation, as well as inconsistencies in the interpretation or application of a particular Article in a DTA.
What is a Competent Authority?
DTAs or treaties are usually concluded between the governments of two countries. These countries are then referred to in the DTAs as the Contracting States or Contracting Parties to such an agreement.
The term “Competent Authority” is used in DTAs and the Multilateral Instrument to identify a position, a person or a body within a Contracting State/Jurisdiction to whom issues can be addressed. The Competent Authority in South Africa is the Commissioner for SARS and MAP duties have been delegated to designated representatives in the Legislative Research and Development subdivision within Legal Counsel.
What is the function of a Competent Authority?
The Competent Authority in a Contracting State/Jurisdiction is charged with the responsibility to interact with its counterparts in any matters arising between the different Contracting States/Jurisdictions pertaining to the interpretation or the application of a DTA, and to resolve any international tax disputes that might arise.
A Competent Authority is generally committed to ensure a good faith application of DTAs. The Competent Authority endeavours to resolve requests from its counterparts in accordance with the provisions of a particular DTA’s Article on MAP.
How does it work?
The DTA permits a mutual agreement procedure (MAP) for resolving difficulties arising from the application of a particular Article in DTAs in the broadest sense of the term.
It basically authorises the Competent Authorities or their designated representatives to communicate with each other directly, for the purpose of resolving the matters that might be brought before them.
A MAP Request for Assistance may deal with any of the following subjects:
Transfer pricing adjustment requests
Attribution of profits of a permanent establishment
Dual residence of individuals and persons other than individuals
Withholding tax levied beyond what is permitted by the applicable DTA
Any other case in which a person considers that the taxation is not in accordance with the applicable DTA
Depending on the relevant subject, the MAP request will be routed into one of two channels, i.e. –
Transfer Pricing MAP; or
Interpretation MAP
MAP Request for Assistance
It is a request from one Competent Authority of a particular DTA’s Contracting State/Jurisdiction, to the Competent Authority of the other Contracting State/Jurisdiction, under a particular Article in a DTA, to resolve any international tax dispute.
Step 1
In cases where the taxation, which is not in accordance with the DTA has been imposed by the other State, the taxpayer may first raise the issue with the other State as agreement by the other State will negate the need for a MAP.
If unsuccessful, or if the error arises from the actions of his State of residence, the taxpayer may then approach the Competent Authority of their country of residence or the Competent Authority of the Contracting State/Jurisdiction to request a MAP under the relevant Article in the DTA.
If the Competent Authority in the country of residence cannot itself resolve the matter, but is in agreement with the taxpayer’s request for a MAP, the Competent Authority is obliged to take up the matter with the Competent Authority of the other Contracting State/Jurisdiction under the specific DTA.
What to submit & Where to submit it
SARS, as the Competent Authority, requires certain minimum information to be included in a MAP Request, whether it is for a Transfer Pricing MAP Request or an Interpretation MAP Request.
The types of MAP Requests, the minimum information required per type, and the relevant email address to be used per type, are set out in the table below.
Types of MAP Requests
Minimum Information Requirements
Email Address
Transfer Pricing MAP Requests, including: Attribution of profits of a permanent establishment An analysis of the issues for which a Competent Authority’s assistance is requested, including the taxpayer’s views on any possible basis on which to resolve the issues, must be submitted with the minimum requirements listed Interpretation MAP Requests, including: Dual residence of individuals and persons other than individuals Withholding tax levied beyond what is permitted by the applicable DTA Any other case in which a person considers that the taxation is not in accordance with the applicable DTA
It is suggested that a MAP Requests be submitted to SARS after the South African resident taxpayer has, where applicable, first approached the foreign revenue authority to make that revenue authority aware that, in that taxpayer’s view, tax which is not in accordance with the provisions of the relevant DTA, has been levied by the foreign revenue authority If the matter cannot be resolved through that approach, then the South African resident can approach the Competent Authority at SARS for assistance MAP Requests should contain all the minimum requirements stipulated for each type, and should be submitted to the correct email address to ensure that they reach the correct section and be dealt with in accordance with their requirements For more information on the MAP process refer to the Guide on Mutual Agreement Procedures
