Gibraltar has undergone its Stage 1 peer review of the BEPS Action 14 Minimum Standard. This Action seeks to improve the resolution of tax-related disputes between jurisdictions as a result of an increase in the mobility of international labour and cross-border business as the global economy continues to develop. It is therefore more commonplace that disputes relating to which jurisdictions can tax what types of income inevitably arises. The existence of a Mutual Agreement Procedure (MAP) in tax treaties based on the OECD Model contain a provision providing for a process used to resolve such disputes.
The Action 14 Minimum Standard assesses a jurisdiction’s legal and administrative framework in 2 stages and includes the prevention of disputes, availability and access to MAP, resolution of MAP cases and the implementation of MAP agreements.
Gibraltar’s peer review has concluded that our Double Taxation Agreement with the UK is fully compliant with the requirements of the Action 14 Minimum Standard. Despite Gibraltar not being involved in any MAP cases or agreements during the period under review, the OECD assessors have reported that Gibraltar meets, in principle, all the requirements under the Action 14 Minimum Standard in relation to the resolution of MAP cases.
The report also states that Gibraltar was very responsive in the course of the drafting of the peer review report by responding timely and comprehensively . In addition, Gibraltar has also compiled a MAP profile and MAP Guidance as required under this process. The MAP Guidance was published in March 2020 and is available at: https://www.gibraltar.gov.gi/ income-tax-office/downloads-ito, whilst the MAP Profile is available at https://www.oecd.org/tax/dispute/gibraltar-dispute-resolution-profile.pdf.
The objective of the Action 14 Minimum Standard is to make dispute resolution mechanisms more effective and is underpinned by a continuous effort by the jurisdiction. This is evident in that despite not having substantive recommendations, the OECD requires Gibraltar to seek to approach any future MAP cases in-line with domestic policy and also ensure that future treaties negotiated by Gibraltar include the relevant provisions to ensure compliance with the Action 14 Minimum Standard.
This is in-line with Gibraltar’s strategy and approach in ensuring that, whilst it seeks to expand its treaty network, it complies with international standard on such matters and ensures that it is actively participating in measures designed to combat base erosion and profit shifting as a member of the OECD’s Inclusive Framework. This is something that Gibraltar is fully committed to.