What is MAP?

The Mutual Agreement Procedure (MAP) is a formal process under Double Taxation Agreements (DTAs) that allows the UAE and other treaty partners to resolve:

• Disputes arising due to taxation not in accordance with the DTA, including double taxation;
• Interpretation or application issues of the DTA.

Background

UAE has 100+ DTAs with jurisdictions worldwide. DTAs aim to eliminate double taxation on income and capital and prevent tax evasion. MAP is based on Article 25 of the OECD Model Tax Convention (MTC).

UAE is also a signatory to the OECD MLI, allowing automatic updates of DTAs where both treaty partners align their positions. However, different countries might have reservations that are not aligned with the UAE’s position, in which case certain provisions of the MLI will not apply to the DTA. Taxpayers must always check the specific DTA to confirm if MAP is available and under what terms.

Competent Authority (CA)

• A Competent Authority is defined under each DTA.
• The Competent Authority for the DTAs in the UAE is the UAE Competent Authority (UAE CA), whose role is to eliminate double taxation and re-audit of taxpayers under the MAP provisions.
• The UAE CA is separate from and acts independently from the FTA to ensure objectivity.
• Dedicated members of the FTA, independent of the tax audit function, shall collaborate with the UAE CA on MAP cases, assisting in implementing MAP agreements and obtaining relevant documents.

MAP Process

Eligibility for MAP

MAP is available where a taxpayer reasonably believes:

• An action of one or both states results (or will result) in taxation not in line with the DTA.

Examples:

1. Transfer pricing adjustments not matched by a foreign deduction.
2. Dual residency issues (natural/juridical persons).
3. Permanent Establishment (PE) profit attribution disputes.
4. Multilateral TP disputes under global profit-split models.
5. Bona-fide self-initiated TP adjustments causing double taxation.

• General anti-abuse rules under UAE CT law are outside the MAP scope unless they conflict with the DTA.
• In cases of multilateral tax disputes, the UAE Competent Authority may engage in a multilateral MAP involving two or more states, depending on the provisions of the relevant DTAs between the UAE and those states.
• The UAE CT law allows self-assessed transfer pricing adjustments under MAP if they result in double taxation, are made in good faith, and supported by thorough documentation and analysis.
• If concluded tax audits in certain states require taxpayers to surrender their access to MAP as part of an audit settlement, the UAE Competent Authority will not consider this as a valid reason to deny access to MAP in the UAE.

Time Limits

MAP request must be filed within 3 years of the first notification of the offending tax action. Submission can be made before a formal assessment if an adjustment is deemed probable. UAE CA may allow some flexibility for recent breaches but encourages timely filings.

Interaction with Domestic Remedies

MAP and domestic litigation cannot proceed simultaneously. Taxpayers may file a MAP claim but must suspend legal proceedings during MAP. If MAP is accepted, domestic appeals must be withdrawn. If MAP is rejected or taxpayer does not accept the result, domestic remedies can resume. Final rulings by UAE courts or Tax Dispute Resolution Committees bind the UAE CA.

Filing a MAP Claim

MAP requests should be submitted to: [email protected]

If permitted by the DTA, it is encouraged to submit MAP requests to the CA’s of both countries, which might benefit by shortening the assessment timeline.

Required Information Includes:

• Taxpayer & related party details (incl. QFZP status).
• Foreign tax authority details.
• Relevant DTA articles and interpretation.
• Fiscal periods and facts of the dispute.
• TP documentation, Masterfile (if applicable).
• Correspondence with foreign authorities, tax assessments, and rulings.
• Status of objections or appeals.
• Residency proof (e.g. tax certs, passport stamps, utility bills).
• Any settlements or agreements impacting the case.
• Taxpayer’s suggested resolution options.

Submissions must be in English or Arabic. Bilingual translations may be requested. The UAE CA may request additional information if needed, which must be provided within 3 months, or the process may be discontinued by the CA.

To avoid duplicates and improve efficiency, taxpayers can request a multi-year resolution via MAP for recurring issues, provided the facts remain consistent and the request is submitted within the DTA time limits.

Assessment & Process Flow

• Submission & Completeness Check

UAE CA verifies Timeliness, Completeness, Validity of the taxpayer’s claim and responds within 2 months of submission. Where the claim is rejected, the UAE CA will contact the corresponding CA and taxpayer to explain the basis of rejection.

• Relief Evaluation

If objection is justified, UAE CA, attempts unilateral relief, or initiates bilateral MAP with the other Competent Authority.

If the UAE CA believes it alone cannot fully resolve the double taxation issue, the MAP claim enters bilateral negotiations, with the UAE CA preparing a position paper to share with the relevant Competent Authority. The taxpayer’s role is limited to providing views and assisting in fact-finding, although they may be invited to present to ensure a common understanding.

Outcome

If Agreement is Reached Taxpayer notified within 2 months. Taxpayer must accept /reject within 1 month.

• If accepted – Withdraw legal remedies, submit voluntary disclosure to FTA (if needed), FTA implements resolution.
• If No Agreement or Rejected by Taxpayer: Case is closed; taxpayer may pursue domestic remedies.
• If Arbitration Applies (under certain DTAs): May be initiated if no agreement is reached within defined timeline and no domestic decision exists.

Penalties and Tax Treatment

If a MAP agreement is reached, penalties related to corporate tax liability will be adjusted in line with the DTA and MAP outcome. However, penalties for breaching domestic law, such as transfer pricing documentation, will not be adjusted under MAP, though taxpayers may seek reduction or waiver under UAE domestic laws.

During the MAP process, tax payable under an FTA assessment will not be suspended. If a MAP agreement reduces or waives the tax liability, any tax paid will be refunded, but if no agreement is reached, the tax liability and penalties continue to accrue unless relief is obtained through domestic remedies.

Key Takeaways for Taxpayers:

1. Verify double taxation and the relevant DTA, and check MAP filing time limits.
2. Consider available domestic remedies alongside the MAP process.
3. Conduct thorough fact-finding and retain relevant records to strengthen your claim.
4. Respond to the UAE CA within one month and maintain transparent communication.