Under this commitment, subject to their domestic legislations and administrative practices, members of the Inclusive Framework will respect the outcome determined under the simplified and streamlined approach to in-scope transactions where such approach is applied by a covered jurisdiction and will take all reasonable steps to relieve potential double taxation that may arise from the application of the simplified and streamlined approach where there is a bilateral tax treaty in effect between the relevant jurisdictions.
Jurisdictions can use the model competent authority agreement included in this note to implement the political commitment where there is a tax treaty in place. Entering into a competent authority agreement is optional for jurisdictions. The absence of such an agreement does not, in itself, impede the implementation of the political commitment, which could be implemented by jurisdictions through other means in light of their legal and administrative systems.
Inclusive Framework members that wish to extend the political commitment to jurisdictions not included in the list of covered jurisdictions may also use this model.
The model includes optional provisions in blue so competent authorities can customise the agreement to the particular circumstances of the applicable tax treaty (e.g. ambulatory reference to the OECD Transfer Pricing Guidelines). Similarly, the text of this model competent authority agreement should be considered as suggested language only; therefore, jurisdictions are free to modify the specific language of the different provisions in their bilateral negotiations.
When including the optional provisions for ambulatory references in their competent authority agreements, jurisdictions should bear in mind that future updates to the OECD Transfer Pricing Guidelines regarding the simplified and streamlined approach may become applicable.