Mutual Agreement Procedure in Saudi Arabia: A Guide for Taxpayers
The Mutual Agreement Procedure (MAP) is a process available to taxpayers that allows them to resolve issues related to double taxation or taxation not in accordance with an applicable tax treaty. This process is provided under most bilateral tax treaties, including the one between Saudi Arabia and other countries. Saudi Arabia provides a well-defined procedure for taxpayers to avail the MAP process and resolve tax disputes with the authorities.
The MAP is a dispute resolution mechanism that facilitates the resolution of cross-border tax disputes between countries, including disputes related to transfer pricing, permanent establishment, and tax residence issues. It allows taxpayers to submit a request for assistance to the Competent Authorities of both countries involved in the dispute.
The MAP process is initiated by the taxpayer by submitting a request for assistance to the Competent Authority of the country where the taxpayer is resident. In the case of Saudi Arabia, the requests can be submitted to the General Directorate of International Cooperation (GDIC) at the Saudi Arabian Ministry of Finance. The request should include detailed information about the issue and the relief sought along with evidence to support the claim.
Once the GDIC receives the request, it will communicate the request to the Competent Authority of the other country involved in the dispute. The Competent Authorities of both countries will then work together to resolve the dispute and reach a mutual agreement. The process can involve discussions between the Competent Authorities, meetings with the taxpayer, and exchanges of information between the countries.
The MAP process in Saudi Arabia is subject to strict deadlines. The taxpayer should submit the request as soon as possible, and the Competent Authorities should reach a mutual agreement within two years of the receipt of the request. The Competent Authorities may extend the deadline in exceptional circumstances.
The MAP process is available to all taxpayers in Saudi Arabia, including individuals and companies. However, the process is particularly useful for multinational companies that have operations in different countries. These companies may face challenges related to transfer pricing, permanent establishment, and tax residence issues, which can lead to double taxation.
In summary, the MAP process in Saudi Arabia is a useful mechanism for taxpayers to resolve cross-border tax disputes. The process is well-defined, and the Competent Authorities of both countries work together to reach a mutual agreement. Taxpayers should be aware of the deadlines and submit their requests as soon as possible. By availing the MAP process, taxpayers can avoid double taxation and ensure that their tax affairs are in compliance with the applicable tax treaty.