Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, sometime abbreviated BEPS multilateral instrument, is a multilateral convention of the Organisation for Economic Co-operation and Development to combat tax avoidance by multinational enterprises (MNEs) through prevention of Base Erosion and Profit Shifting (BEPS). The BEPS multilateral instrument was negotiated within the framework of the OECD G20 BEPS project and enables countries and jurisdictions to swiftly modify their bilateral tax treaties to implement some of the measures agreed.[3]

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting
BEPS Convention Signatory Map.svg
Signatories (blue) and Parties (orange) to the convention and Expression of Intent (pink)
Signed7 June 2017
LocationParis
Effective1 July 2018
Condition19 ratifications[1]
Signatories87[2]
Parties15[2]
DepositarySecretary-General of the Organisation for Economic Co-operation and Development
LanguagesEnglish and French

The substance of the tax treaty-related BEPS measures (under BEPS Actions 2, 6, 7 and 14) was agreed as part of the Final BEPS Package. Accordingly, the negotiation on the text of the BEPS multilateral instrument was focused on how the BEPS multilateral instrument would need to modify the provisions of bilateral or regional tax agreements in order to implement those BEPS measures.[4]

The BEPS multilateral instrument was adopted on 24 November 2016 and signed on 7 June 2017 by 67 jurisdictions for the first signing ceremony.[2] As of July 2018, 83 jurisdictions have signed the BEPS multilateral instrument, covering more than 1,400 bilateral tax treaties. It entered into force on 1 July 2018, among the first jurisdictions that ratified it.[2]

FunctioningEdit

The BEPS multilateral instrument looks to "prevent treaty abuse, improve dispute resolution, prevent the artificial avoidance of permanent establishment status and neutralise the effects of hybrid mismatch arrangements".[5] The BEPS multilateral instrument does not function in the same way as an amending protocol to a single existing treaty, which would directly amend the text of the existing tax treaty. Instead, it applies alongside the existing tax treaties. As stated in the Explanatory Statement[4] of the BEPS multilateral instrument this reflects the ordinary rule of treaty interpretation, as reflected in Article 30(3) of the Vienna Convention on the Law of Treaties, under which an earlier treaty between parties that are also parties to a later treaty will apply only to the extent that its provisions are compatible with those of the later treaty. With one convention, the signatory countries can achieve a work that would have taken decades otherwise.[6]

Consistent with the purpose of the BEPS multilateral instrument, which is to swiftly implement the tax treaty-related BEPS measures, the BEPS multilateral instrument also enables all parties to meet 2 of the 4 minimum standards which were agreed as part of the Final BEPS package.[7] Given, however, that each of those minimum standards can be satisfied in multiple different ways, and given the broad range of countries and jurisdictions involved in the development of the BEPS multilateral instrument, the BEPS multilateral instrument gives flexibilities with respect to ways of meeting it while remaining consistent with its purpose.[5] The BEPS multilateral instrument also provides flexibility by allowing to opt out of provisions which do not reflect a BEPS minimum standard.[4]

PartiesEdit

A list of ratified parties to the convention is shown below (as of 22 July 2020). Of the 94 jurisdictions covered, 47 have deposited their instrument of ratification, approval or acceptance.[2]

Jurisdiction Date of entry into force
  Australia 1 January 2019
  Austria 1 July 2018
  Belgium 1 October 2019
  Canada 1 December 2019
  Curaçao 1 July 2019
  Cyprus 1 May 2020
  Czech 13 May 2020
  Denmark 1 January 2020
  Finland 1 June 2019
  France 1 January 2019
  Georgia 1 July 2019
Germany 1 April 2021
Greece 1 July 2021
  Guernsey 1 June 2019
Hungary 1 July 2021
  Iceland 1 January 2020
  India 1 October 2019
  Indonesia 1 August 2020
  Ireland 1 May 2019
  Isle of Man 1 July 2018
  Israel 1 January 2019
  Japan 1 January 2019
  Jersey 1 July 2018
  Kazakhstan 1 October 2020
  South Korea 1 September 2020
  Latvia 1 January 2020
  Liechtenstein 1 April 2019
  Lithuania 1 January 2019
  Luxembourg 1 August 2019
  Malta 1 April 2019
  Mauritius 1 February 2020
  Monaco 1 May 2019
  Netherlands 1 July 2019
  New Zealand 1 October 2018
  Norway 1 November 2019
  Oman 1 November 2020
Pakistan 1 April 2021
  Poland 1 July 2018
  Portugal 1 June 2020
  Qatar 1 April 2020
  Russia 1 October 2019
  San Marino 1 July 2020
  Saudi Arabia 1 May 2020
  Serbia 1 October 2018
  Singapore 1 April 2019
  Slovakia 1 January 2019
  Slovenia 1 July 2018
  Sweden 1 October 2018
  Ukraine 1 December 2019
  United Arab Emirates 1 September 2019
  United Kingdom 1 October 2018
  Uruguay 1 June 2018

See alsoEdit

ReferencesEdit

  1. ^ "OECD Countries Sign Multilateral Treaty on Double Taxation". Bloomberg BNA. Retrieved 14 August 2017.
  2. ^ a b c d e "Signatories and Parties (MLI Positions)" (PDF). OECD. Retrieved 25 July 2018.
  3. ^ "Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS". OECD. Retrieved 25 July 2018.
  4. ^ a b c "Explanatory statement to the MLI" (PDF). OECD. Retrieved 23 July 2018.
  5. ^ a b "FAQ on the MLI" (PDF). OECD. Retrieved 23 July 2018.
  6. ^ "Multilateral instrument: no time for BEPS fatigue". EY Tax Insights. Retrieved 24 July 2018.
  7. ^ "Press Release of the BEPS Project". OECD. Retrieved 25 July 2018.

External linksEdit