OECD Arbitration in Tax Treaty Law

1. S. 338Introduction

Canada has always been very agile in arbitration and has included voluntary arbitration provision in its tax treaties very early. However such voluntary arbitrations were not in effect and there was a huge inventory of pending Mutual Agreement Procedure (‘MAP’) cases (mostly involving transfer pricing issues) with the United States (‘US’). Given this, actual effective arbitration came into picture in 2009 with the US when Canada amended its tax treaty and included mandatory arbitration. Since then, Canada’s arbitration experience with the US has been very smooth to resolve pending inventories quickly. Later on in 2016, mandatory arbitration with the United Kingdom (‘UK’) also became effective. Following this, naturally, Canada opted for Part-VI i.e. mandatory arbitration in the Multilateral Instrument (‘MLI’) as well.

The aim of this thesis is to present detailed arbitration journey of Canada so far. In this regard, Section 2. provides a brief snapshot of the relevant tax policy and arbitration provisions in Canadian tax treaties. Further, Section 3. discusses scope limitations and the extent of its alignment with the OECD and UN model. Canada has effective arbitration wi...