Will binding arbitration improve cross-border dispute resolution?

When the OECD published its final package of measures with regard to its BEPS project, Action 14 was focused on making dispute resolution mechanisms more effective by strengthening the mutual agreement procedure (MAP) and minimising the potential risk of double taxation. The minimum standards proposed by the OECD will be complemented by a set of best practices. Without a mandatory binding arbitration provision, most tax treaties simply provide that the competent authorities must ‘endeavour’ to resolve the position by mutual agreement. However, HMRC has already taken steps to improve dispute resolution by introducing alternative dispute resolution (ADR); and the UK has started updating its double tax treaties with regard to arbitration.