OECD Updates Manual on Effective MAP: Practical Tax Takeaways

In early February 2026, the OECD released an updated edition of its Manual on Effective Mutual Agreement Procedures, consolidating and refining prior guidance on the MAP process through the entire lifecycle of a proceeding under bilateral income tax treaties. This article examines seven key takeaways from the updated Manual, highlighting its implications for tax departments in the current controversy environment. The update comes at a critical time, as the growing number of MAP cases globally has strained resources and extended resolution timelines. By promoting more efficient and standardized practices, the Manual aims to improve the effectiveness and timeliness of MAP proceedings, potentially allowing competent authorities to focus on more complex disputes. Manual p. 3. Understanding these developments is crucial for tax professionals navigating cross-border tax controversies and developing effective dispute resolution strategies.

While the Manual is not binding on competent authorities or taxpayers, it is intended as practical guidance, reflecting accumulated experience from nearly two decades of MAP practice since the Organisation for Economic Co-operation and Development’s original 2007 manual. Although the OECD has articulated a target of resolving MAP cases within 24 months, average completion times in practice remain north of 30 months. 2024 Mutual Agreement Procedure Statistics. Hopefully competent authorities around the world implement much of the practical guidance from this updated Manual to help drive down those completion dates.

A Renewed Emphasis on Pragmatic, Solution-Oriented Resolution

One of the clearest themes in the updated Manual is an expectation that competent authorities approach MAP with a pragmatic, solution-oriented mindset, rather than as an extension of audit or litigation positions. Manual ¶¶32, 123; Best practices 8, 39, 44. The Manual repeatedly emphasizes that MAP discussions should be principled, fair, and focused on eliminating taxation not in accordance with the treaty, rather than defending revenue outcomes.

This emphasis is not new, but the Manual places it front and center, particularly in its discussion of bilateral negotiations, position papers, and meetings between competent authorities. The guidance encourages reasonable compromise where appropriate, avoidance of extreme positions, and an openness to practical solutions that resolve disputes efficiently. This is consistent not only with our experience but also with the way that numerous competent authorities view their mandate. Reiterating that mindset as a best practice for all competent authorities is a welcome emphasis.

For taxpayers, this too reinforces the importance of presenting MAP cases in a way that facilitates resolution rather than entrenches disagreement. Providing competent authorities the “tools” necessary to resolve cases successfully will remain as critical as ever.

MAP’s Role as a Central, Confidential Dispute Resolution Tool

The updated Manual reaffirms MAP’s important role as a core treaty-based dispute resolution mechanism within the wider ecosystem of tax certainty and resolution mechanisms. It recognizes that MAP is often less costly, less time-consuming, and more flexible than litigation, and, importantly, that it allows disputes to be resolved in a confidential setting between governments. Manual ¶¶2, 13 (citing to Article 26 of the OECD Model Tax Convention).

In that context, the Manual again underscores the confidential nature of MAP proceedings. Competent authority proceedings, including taxpayer submissions, are not to be disclosed to the general public. Article 26 of the OECD Model Tax Convention provides the parameters for this protection. The renewed emphasis on confidentiality is particularly relevant as taxpayers increasingly weigh a confidential MAP proceeding against public litigation.

Greater Focus on Unilateral Relief and Early-Stage Engagement

Compared with the 2007 Manual, the updated guidance places greater emphasis on early-stage analysis and unilateral relief. Competent authorities are encouraged to conduct an early review of cases to determine whether there is a true “double tax” issue under the treaty and, if there is, whether unilateral relief can fully eliminate taxation that is not in accord with the treaty, without the need for prolonged bilateral discussions. Manual §2 (Unilateral Phase of MAP), Steps 1-4.

Some taxpayers may worry that this emphasis could be used by certain jurisdictions to deny access to MAP altogether or to close cases prematurely. That concern is certainly understandable but likely (and hopefully) overstated. Similar concerns were raised when the IRS updated and made public its advance pricing agreement (APA) processes; much of that concern, however, did not come to fruition. Interim Guidance on Review and Acceptance of Advance Pricing Agreement (APA) Submissions, LB&I-04-0423-0006 (Apr. 25, 2023).

Our hope is that the Manual’s emphasis on early-stage analysis is more focused on ensuring that cases (involving anti-abuse provisions (Manual ¶95), domestic audit resolution (Manual ¶93), or applying for a unilateral APA (Manual ¶94)) are not closed prematurely without a bilateral discussion (Manual ¶110; Best practice 35). The implementation and execution of these guidelines will (ideally) lead to more cases being appropriately resolved, and those that need bilateral negotiations are more fully formed once they move to that phase. Manual ¶94.

To this latter point specifically about cases being fully formed, the Manual emphasizes that MAP is not a mechanism to end an examination early. Manual ¶¶67-68. In the US, for example, the Advance Pricing and Mutual Agreement (APMA) program will generally not accept a MAP request until the IRS has completed its audit work and issued a Notice of Proposed Adjustment (NOPA). Rev. Proc. 2015-40, Sec. 3.04. The Manual explains that when taxpayers are unnecessarily uncooperative during the examination phase, it has led to a higher risk of double taxation in practice. Manual ¶68. But the Manual is quick to explain that this exclusion should not apply when a taxpayer disputes the volume of information or documents requested by exam that are disproportionate or unreasonable to the issue. Manual ¶68.

On the flip side, the Manual emphasizes that if an examination has ended but that examination’s position is not sufficiently documented or supported due to lack of fact finding or examination-level analysis, the competent authority whose government made the adjustment should consider providing unilateral relief for the taxpayer or conducting additional fact-finding or analysis that will provide additional support for the adjustment (Manual ¶116). This will free up resources of the competent authorities at the bilateral stages to focus more on negotiations than unnecessary fact-finding (especially for more routine cases).

Clarifying Taxpayer Responsibilities During MAP

Another notable feature of the updated Manual is its clearer articulation of taxpayers’ responsibilities in MAP. Taxpayers are expected to provide complete, accurate, and timely information on material issues, cooperate in good faith, and support efficient resolution. At the same time, the Manual cautions against overwhelming competent authorities with immaterial or irrelevant information. The focus is on clarity and relevance, not volume. Manual ¶81. Like all of the Manual’s updates, these, in particular, appear to be in response to “less than ideal” experiences in MAP.

The updates to the Manual could also be interpreted to reflect an evolution in how taxpayer participation is approached as there appears to be less emphasis during the bilateral stage of MAP than in the 2007 Manual. The Manual explains that taxpayers may meet with competent authorities during pre-MAP consultation to help clarify the scope of information needed for a submission, including whether the competent authority sees any gaps in the taxpayers’ approach or to guide them on areas where further clarification or analysis may be necessary. Manual ¶¶55-56; Best practice 15.

After the case is submitted and once a case is admitted into MAP, the competent authorities may further request additional information, including, in particularly complex transfer pricing matters, joint functional interviews or site visits (Manual ¶109); such a discussion, however, is exclusively in the unilateral phase of MAP discussion and not emphasized in the bilateral phase of MAP. The Manual also explains that taxpayers may offer suggestions for resolving the matters, although such suggestions are not binding on the competent authorities. Manual ¶70.

In contrast, the 2007 Manual, Best practice 13 provided that it may be a valuable exercise to have the taxpayer make a joint presentation to both competent authorities to assist with fact-finding, to clarify issues and transactions, and to share the taxpayer’s views with the competent authorities. Interestingly, presentations or sharing of the taxpayer’s views are not identified as best practices in the updated Manual; though in our experience, presentations have proven to be extremely valuable, and competent authorities have shared this view. We therefore question whether the updated Manual’s omission of references to presentations was intentional. At most, in the Bilateral Phase of MAP section, Best practice 45 notes that taxpayers should make themselves available for communications, calls, and meetings with the competent authorities throughout the MAP process to support the efficient, effective, and timely handling and resolution of MAP cases.

While taxpayer interactions are not emphasized as much as in the 2007 Manual, the updated guidance discusses the possibility of joint fact-finding with domestic examination teams (e.g., the IRS or Canada Revenue Agency) during Bilateral meetings to ensure that competent authorities have a shared understanding of the facts and issues. Manual ¶144. See also Interim Guidance on Mandatory Issue Team Consultations with APMA for Examination of Transfer Pricing Issues Involving Treaty Countries, LB&I-04-0219-001 (Feb. 19, 2019) (providing for APMA and the IRS examination team communications, but generally before an adjustment is finalized and not jointly with the foreign competent authority). But the 2007 Manual did not provide such an emphasis for interactions with the examination function during the Unilateral and Bilateral Phases of MAP. Because the independence of the competent authority function from examination is a core principle of MAP, taxpayers should be aware of, and appropriately informed about, any communications between the examination team and the competent authorities. Manual ¶38 (“A truly independent competent authority function is essential…”). What is concerning about the Manual is that the competent authority of the jurisdiction inviting the examination function should inform the other competent authority about examination’s involvement, but that the competent authority under the Manual has no similar obligation to inform the taxpayer. Manual ¶144.

Indeed, placing less emphasis on the taxpayer’s assistance and more emphasis on the examination teams’ involvement is directly contrary to not only the (perceived) independence of the MAP process but also the Manual’s emphasis on practical outcomes focused on inappropriate double taxation rather than defending a country’s fisc. Transparency around the nature and purpose of any fact-finding interactions will therefore be essential to maintaining confidence in the process, let alone its ultimate effectiveness.

Continued Challenges Regarding Penalties

The updated Manual candidly acknowledges that penalties remain a difficult area for competent authorities in MAP. While the guidance does not fully resolve longstanding differences among jurisdictions regarding the treatment of penalties, it signals an expectation that competent authorities should continue to explore both unilateral and bilateral approaches to penalty relief where penalties are directly connected to treaty-covered taxes. Manual ¶¶157-158; Best practice 50. See also Thomas Linguanti and Drew Cummings, Timing Is Crucial When Seeking Transfer Pricing Penalty Relief (Sept. 9, 2024).

Given the increased frequency with which the IRS asserts penalties—particularly in transfer pricing cases—this aspect of the Manual is significant. Clearer articulation of best practices may give competent authorities greater confidence to address penalties as part of the MAP process, rather than treating them as categorically outside of its scope. Some competent authorities have adopted pragmatic practices, such as indirectly adjusting interest or penalties when they are calculated as a function of the underlying adjustment, or considering penalty relief where the original justification for a penalty no longer holds after MAP review. These practices may encourage broader adoption, whether through internal processes or on an ad hoc basis. Manual ¶157.

Whether this guidance results in more consistent penalty relief in practice remains to be seen. Any effort to bring more clarity to this penalty relief question is, however, certainly welcome.

No Updated Guidance on Multilateral MAP

The Manual references prior OECD work on multilateral MAP procedures and reiterates that such cases should be handled in accordance with existing guidance. Manual ¶25. However, it does not expand on that framework.

Given the growing prevalence of disputes involving multiple jurisdictions, additional practical guidance on multilateral MAP would be welcome. It remains to be seen whether future OECD work—or domestic guidance, such as potential updates to a US revenue procedure, which has been in the works for a while but with no firm finalization date—will address this gap more fully. Caleb Harshberger, IRS Urged to Address Emerging Issues in Transfer Pricing Update,Daily Tax Rep. (Sept. 27, 2024).

Multi-Year Resolution Focus

The Manual also emphasizes that jurisdictions should take proactive measures to minimize the need for dispute resolution by implementing procedures to allow, in appropriate cases, taxpayer requests for multi-year resolution of recurring issues, especially where the relevant facts and circumstances are similar or the same. Manual, Best practice 6. Where appropriate, jurisdictions are also encouraged to explore the coordination of MAP with APA cases to resolve additional years and to prevent potential MAP cases from returning in future years. By resolving additional years in a single MAP proceeding, competent authorities can continue to free up resources to resolve other matters instead of having to use resources on “re-trying” later tax years for taxpayers as they are audited in subsequent audit cycles.

While APMA can use Accelerated Competent Authority Procedure (or ACAP) to address “out” years, some jurisdictions’ competent authorities do not have legal mechanisms similar to ACAP to extend the resolution to these later years. However, we have found that jurisdictions will work within their legal and procedural rules, including coordinating with their treasury and examination functions, to resolve these subsequent years, either through a pragmatic approach that is consistent with ACAP or through APAs with rollbacks. We trust that the Manual will assist competent authorities in more jurisdictions to gain the authority to resolve issues in out years.

Takeaways

MAP remains an important, if not in some ways indispensable, tool for resolving cross-border tax disputes. The updated Manual does not change the legal framework for MAP but does provide a roadmap aimed at standardizing practices with the goal of accelerating resolution timelines. If the guidance helps competent authorities move closer to the OECD’s 24-month resolution target, it may allow scarce resources to be redeployed toward the most complex cases. For tax departments, understanding these developments is important to navigating the current controversy landscape and making informed decisions about dispute

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Thomas V. Linguanti is a partner at Morgan Lewis in Chicago focused on complex tax controversies and tax litigation.

Drew A. Cummings is a partner at Morgan Lewis in Washington, DC, focused on federal income tax controversy matters.

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