One of the most common challenges faced by multinational companies is the risk of double taxation, which arises when two or more countries claim the right to tax the same income. Disagreements between tax authorities—especially on issues such as transfer pricing and permanent establishment—can result in significant tax liabilities.
To address such conflicts, Mutual Agreement Procedures (MAPs) have been established under most Double Taxation Agreements (DTAs). MAP is a critical mechanism for resolving tax disputes between countries and providing legal certainty to taxpayers.
What Is MAP?
MAP is a treaty-based dispute resolution process that allows a taxpayer to request the competent authority of their country to initiate negotiations with another country’s tax authority. The goal is to eliminate double taxation or correct inappropriate taxation under the applicable tax treaty.
This process enables countries to resolve tax conflicts without resorting to courts, offering a more cooperative and efficient solution for taxpayers.
How Does MAP Work?
- Application: The taxpayer applies to the Turkish Revenue Administration (TRA), or the relevant competent authority.
- Review: The authority reviews whether the application is admissible.
- Negotiation: If accepted, Turkish and foreign tax authorities begin formal discussions.
- Resolution: If an agreement is reached, the tax burden is corrected to avoid double taxation.
Note: MAP is generally an alternative or complement to litigation, but both cannot be pursued simultaneously.
MAP Practice in Turkey
- Turkey is party to over 90 Double Tax Treaties, most of which include MAP provisions.
- Applications are handled by the Revenue Administration and, where relevant, by the Transfer Pricing Unit.
- In line with BEPS Action 14, Turkey has committed to improving the timeliness and effectiveness of MAP.
When Is MAP Applicable?
| Type of Dispute | MAP Relevance |
| Transfer pricing disagreements | Conflicting pricing interpretations between countries |
| Permanent establishment classification | One country deems an activity taxable, the other does not |
| Source vs. residence country conflict | On dividends, interest, or royalties taxation |
| Double taxation | Same income taxed in both jurisdictions |
Time Limits for MAP Applications
MAP requests must generally be filed within 3 years from the first notification of the disputed taxation.
However, the exact time limits depend on the specific DTA provisions in force between the countries.
Advantages of MAP
- Less costly and time-consuming than litigation
- Neutral and cooperative resolution process
- Eliminates the risk of double taxation
- Enhances tax certainty for multinational businesses
- Supports cross-border investment protection
MAP vs. APA: What’s the Difference?
| MAP | APA |
| Retroactive resolution of disputes | Prospective pricing agreement for the future |
| Triggered by a tax conflict | Initiated voluntarily before a conflict arises |
| Involves bilateral negotiations | Can be unilateral, bilateral, or multilateral |
ÖzbekCPA provides professional support in your MAP applications and throughout all stages of the process, offering the most suitable solutions for your company’s international tax obligations.
For more information and consultancy on MAP and other international tax disputes, please contact us.
