Compatibility with audit settlement or assessments with the taxpayer’s agreement

The fact that the tax assessment is the result of an agreement between the tax administration and the taxpayer (acta con acuerdo or audit settlements) does not in any way affect the ability to request the initiation of a mutual agreement procedure to correct the double taxation that may result from the adjustments contained in such audit settlements.

That is, moreover, a requirement of the minimum standard resulting from Action 14 of the OECD’s BEPS Action Plan, on dispute resolution mechanisms, under which audit settlements between the tax administration and the taxpayer do not preclude access to the mutual agreement procedure.

The fact that the taxpayer has expressed approval of the tax assessment (acta de conformidad or tax assessment with the taxpayer’s agreement) does not in any way affect the ability to request the initiation of a mutual agreement procedure to correct the double taxation that may result from the adjustments contained in such tax assessments.

That is, moreover, a requirement of the minimum standard resulting from Action 14 of the OECD’s BEPS Action Plan, on dispute resolution mechanisms, under which audit settlements between the tax administration and the taxpayer do not preclude access to the mutual agreement procedure.

As mentioned above, access to the mutual agreement procedure when an audit settlement has been signed is a requirement of the minimum standard resulting from Action 14 of the OECD’s BEPS Action Plan, on dispute resolution mechanisms. The only exception established in this regard is that said State has established a legal or administrative process for conflict resolution/agreement independent of the inspection and review functions, which can only be accessed at the request of the taxpayer. In the latter case, that information must be made available to taxpayers in the mutual agreement procedure guidance of the state in question.

Where a mutual agreement procedure that has been initiated relates to an adjustment made under an audit settlement, it may be the case that the competent authority to which the request was submitted cannot deviate from it, in which case it must notify the competent authority of the other state concerned of that fact, in case that authority considers it appropriate to fully or partly eliminate the double taxation.