Overall, it is clear that the MLI extends taxpayers` access to three years, both in terms of extending the period during which taxpayers must initiate a POB period, provides an effective two-year period for the relevant authorities to resolve a case (after that date, it may be subject to arbitration). The MLI has led to a greater homogeneity of approach on key issues such as arbitration and, above all, the adoption of a single map article for covered tax treaties. Some might argue that arbitration has the advantage of encouraging Member States to settle disputes before the two-year deadline expires, which would be a success rather than a failure of the convention. However, statistics also show that 202 cases had exceeded the two-year deadline, while it had been cancelled with the taxpayer`s consent. This indicates that taxpayers do not always view the arbitration available to them under the agreement as a desirable means of resolving double taxation. In particular, Article 19 of the compulsory arbitration procedure must be mandatory if the competent authorities are unable to reach an agreement on the settlement of a case within two years of their start. This is a significant restriction on POPs cases in the past, as the competent authorities were only required to try to resolve cases and disputes could be resolved indefinitely. Section 19 ensures that treaty disputes will be resolved within a specified time frame, making the MAP a more attractive option for taxpayers. In addition, sections 20 to 25 provide for the practical functioning of arbitration. In the past, it was often practical constraints or a lack of agreement on how to proceed that blocked the solution. Many tax agreements between jurisdictions contain a provision of the POP providing for a procedure for resolving such disputes.
Article 25 of the OECD Model Tax Convention provides for a mechanism independent of remedies under national law, whereby the competent authorities of the contracting states can resolve disputes or difficulties in interpreting or applying the convention on a consensual basis. This mechanism – the mutual agreement procedure – is fundamental to the proper application and interpretation of tax treaties, in particular to ensure that taxpayers who are entitled to the benefits of the treaty are not taxed by any of the contracting states, which is not in accordance with the provisions of the treaty. Even in the event of an arbitration request, the EU review found that there could be many shortcomings in the system, including delays or lack of setting up the advisory committee and the lack of agreement on the appointment of the chairman of the advisory committee that delays or prevents the procedure. Within the EU, the EU Arbitration Convention came into force on 1 January 1995 as an instrument that promised to allow the elimination of double taxation between Member States. It is important that it provides for a binding and binding arbitration mechanism that eliminates double taxation, with the advice of an independent advisory body, if the competent authorities fail to reach an agreement after two years. This went beyond the existing bilateral agreements at the time, which simply required the competent authorities to make their “best efforts” to eliminate double taxation. The process of mutual unification (POP) remains the most widely used way and the best way to eliminate double taxation. The effective use of PPIs by different instruments has been of interest to the OECD and the EU for more than 20 years.