Organisation for Economic Co-operation and Development’s Committee on Fiscal Affairs announced yesterday that the next edition of the OECD model income tax treaty will provide for mandatory binding arbitration of competent authority disputes.  From the press release:

OECD countries have agreed to broaden the mechanisms available to companies and individuals involved in cross-border disputes over taxation by introducing the possibility of arbitration if other attempts to resolve disagreements fail. The decision is important both for companies investing outside their home country and for individuals living and working in more than one country. Cross-border tax disputes can arise when two states assert conflicting rights to tax an individual or company. As cross-border trade grows and more and more people work abroad, such disputes are likely to become more frequent. To address this prospect, the OECD’s Committee on Fiscal Affairs has agreed to modify the OECD Model Tax Convention, which serves as a basis for most negotiations between countries on tax matters, by including the possibility of arbitration in cross-border disputes if they remain unresolved for more than two years.