Characteristic of mutual Agreement procedure in case of the double taxation treaty between Azerbaijan and Ukraine

Abstract

The article is dedicated to comparative and legal analysis of the provisions on mutual agreement procedure in Art. 25 of the Convention between the Government of Ukraine and the Government of Azerbaijan Republic on Avoidance of Double taxation and Prevention of Tax Evasion regarding Taxes on Income and Capital dated 30 July 1999 in the context of recommendations included in Art. 25 of the OECD Model Tax Convention. The latter one is widely recognized source of interpretation of norms of bilateral double taxation treaties in many countries including Ukraine. This analysis, on the one hand, is aimed at finding ways of improvement of normative basis of mutual agreement procedure taking into consideration the risk of high number of tax disputes (for example, the replacement of the term ‘person’ with the term ‘resident’ in the first sentence of Art. 25(1) of the abovementioned Convention creates the risk of ambiguity in the context of personal scope of mutual agreement procedure in case of non-compliance of contracting state with the duties on non-discrimination regime) and, on the other hand, is assisting in the determination of compliance of Art. 25 of the abovementioned Convention with other international commitments of both contracting states (e.g., both contracting states have accepted commitments to introduce three-year minimum term for initiation of mutual agreement procedure by taxpayers according to the framework of the global campaign on counteracting base erosion and profit shifting but Art. 25(1) of the mentioned Convention does not mention such limitation in contrast to the provisions of Art. 25(1) of the OECD Model Tax Convention). Moreover, the author also admits that Art. 25(2) of the bilateral Convention does not include reference to the duty on implementation of mutual agreements concluded between competent authorities under the mutual agreement procedure without the link to the domestic time limits that is also not in accordance of the multilateral commitments. On the basis of this analysis, the author determines the need of amendments of Art. 25(1) and Art. 25(2) of the mentioned Convention that could improve efficiency and effectiveness of mutual agreement procedure as a mechanism of dispute resolution.