International arbitration for tax disputes, 'baseball' style

Sun Nov 25, 2012 9:59am EST
 
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* U.S. leads Canada 3-0 in winner-takes-all tax game

* Arbitration rulings are confidential

* Companies welcome the certainty of arbitration

By Patrick Temple-West

WASHINGTON, Nov 25 (Reuters) - The United States is undefeated in the nearly two years since it began settling corporate tax disputes with Canada through a winner-takes-all process popularly known as baseball arbitration.

Tax lawyers and accountants in both countries said the U.S. Internal Revenue Service had won three of the binding decisions and Canada none. They said the IRS had collected a significant sum of money, possibly in excess of $100 million.

Launched in December 2010, the arbitrations follow the rules for resolving salary disputes between Major League Baseball players and their teams. In the tax game, however, the companies forced to pay and the payments remain confidential.

The United States has had similar agreements with France since 2004 and Belgium and Germany from 2006, but no cases involving them have gone to baseball arbitration, the tax experts said.

Baseball arbitration plans are in pending tax treaties with Hungary, Luxembourg and Switzerland. Future treaties with the United Kingdom and Japan may have the same provisions, tax experts said.   Continued...