Canada: Mutual agreement procedure (MAP) statistics for 2020

A report of the mutual agreement procedure (MAP) program for 2020 highlights that the Canada Revenue Agency (CRA) closed more MAP cases in 2020 compared to 2019 in roughly the same amount of time (just under 18 months).

The MAP report covers the CRA's administration of the MAP program to resolve instances of double taxation and is relevant for taxpayers with cross-border business or financial dealings.

The CRA is currently engaged in negotiable MAP cases involving taxpayers from 31 different jurisdictions, the majority of which (46% of cases) involve the United States.

Canadian-initiated cases continue to dominate the MAP process, with 81% of completed cases being initiated in Canada in 2020.
 

MAP cases

• 165 negotiable MAP cases as of 1 January 2020
• 72 new MAP cases accepted during the year
• 74 MAP cases closed in 2020 (up from 60 in 2019)
• Time to complete—an average of 17.8 months to complete a negotiable MAP case in 2020 (up slightly from 17.6 months in 2019)
  • Time to complete Canadian-initiated cases in 2020—approximately 25 months (up from 16 months in 2019)
  • Time to complete foreign-initiated cases in 2020—approximately 11 months (down from 23.5 months in 2019)

The CRA targeted completion times of 24 months for both foreign and Canadian initiated adjustments.
 

Relief obtained

• Taxpayer in 36 out of the 74 cases closed in 2020 (almost 49%) received full relief from double taxation.
• In eight cases (11%), the taxpayer received unilateral relief.
• In three cases (4%), the case was resolved domestically.
• The remaining 27 cases (36%) were either withdrawn by the taxpayer, had objections not justified, resulted in no agreement or were denied MAP access.
   

Inventories of case files

• At year-end, 77% of negotiable cases were transfer pricing cases (which are referred to in the MAP report as “attribution/allocation cases”).
• The CRA's inventory of transfer pricing cases increased slightly in 2020 to 126 (up from 123 in 2019).
• The CRA accepted 55 new cases and completed 52 cases in 2020. On average, these transfer pricing cases were closed in just under 23 months.
• The CRA's non-negotiable MAP cases (when the foreign tax authority is not involved) increased significantly to 318 cases in 2020 (up from 77 in 2019), largely as a result of COVID-19-related delays in closing cases involving certain pension elections under the Canada-United States income tax treaty.

The MAP program is designed to help taxpayers resolve cases of double taxation, or taxation that does not agree with a tax treaty.

The MAP procedure is included in Canada's bilateral tax conventions. Under these tax treaty provisions, residents of either country can ask for help in resolving an issue covered by the treaty. In Canada, authority for resolving tax disputes is delegated to senior CRA officials known as the “Competent Authority.”

The Organisation for Economic Co-operation and Development (OECD) also publishes MAP statistics on an annual basis and further breaks the MAP caseload down by each jurisdiction, including Canada.

Read a March 2022 report prepared by the KPMG member firm in Canada