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

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Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting
Signatories (blue) and Parties (orange) to the convention and Expression of Intent (pink)
Signed7 June 2017
LocationParis, France
Effective1 July 2018
Condition19 ratifications[1]
Signatories104[2]
Parties87[2]
DepositarySecretary-General of the Organisation for Economic Co-operation and Development
LanguagesEnglish and French

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]

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]

Functioning

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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]

Parties

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A list of ratified parties to the convention is shown below (as of September 2024). Of the 104 jurisdictions covered, 87 have deposited their instrument of ratification, approval or acceptance.[8]

Jurisdiction Date of entry into force
 Albania 1 January 2021
 Andorra 1 January 2022
 Armenia 1 January 2024
 Australia 1 January 2019
 Austria 1 July 2018
 Azerbaijan 1 January 2025
 Bahrain 1 June 2022
 Barbados 1 April 2021
 Belgium 1 October 2019
 Belize 1 August 2022
 Bosnia and Herzegovina 1 January 2021
 Bulgaria 1 January 2023
 Burkina Faso 1 February 2021
 Cameroon 1 August 2022
 Canada 1 December 2019
 Chile 1 March 2021
 China 1 September 2022
 Costa Rica 1 January 2021
 Croatia 1 June 2021
 Curaçao 1 July 2019
 Cyprus 1 May 2020
 Czech 1 September 2020
 Denmark 1 January 2020
 Egypt 1 January 2021
 Estonia 1 May 2021
 Finland 1 June 2019
 France 1 January 2019
 Georgia 1 July 2019
 Germany 1 April 2021
 Greece 1 July 2021
 Guernsey 1 June 2019
 Hong Kong 1 September 2022
 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
 Ivory Coast 1 January 2024
 Japan 1 January 2019
 Jersey 1 July 2018
 Jordan 1 January 2021
 Kazakhstan 1 October 2020
 South Korea 1 September 2020
 Latvia 1 February 2020
 Lesotho 1 November 2022
 Liechtenstein 1 April 2020
 Lithuania 1 January 2019
 Luxembourg 1 August 2019
 Malaysia 1 June 2021
 Malta 1 April 2019
 Mauritius 1 February 2020
 Mexico 1 July 2023
 Monaco 1 May 2019
 Mongolia 1 January 2025
 Netherlands 1 July 2019
 New Zealand 1 October 2018
 Norway 1 November 2019
 Oman 1 November 2020
 Pakistan 1 April 2021
 Panama 1 March 2021
 Papua New Guinea 1 December 2023
 Poland 1 July 2018
 Portugal 1 June 2020
 Qatar 1 April 2020
 Romania 1 June 2022
 Russia 1 October 2019
 San Marino 1 July 2020
 Saudi Arabia 1 May 2020
 Senegal 1 September 2022
 Serbia 1 October 2018
 Seychelles 1 April 2022
 Singapore 1 April 2019
 Slovakia 1 January 2019
 Slovenia 1 July 2018
 South Africa 1 January 2023
 Spain 1 January 2022
 Sweden 1 October 2018
  Switzerland 1 December 2019
 Thailand 1 July 2022
 Tunisia 1 November 2023
 Ukraine 1 December 2019
 United Arab Emirates 1 September 2019
 United Kingdom 1 October 2018
 Uruguay 1 June 2020
 Vietnam 1 September 2023

See also

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References

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  1. ^ "OECD Countries Sign Multilateral Treaty on Double Taxation". Bloomberg BNA. Retrieved 14 August 2017.
  2. ^ a b c d "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.
  8. ^ "Signatories and Parties (MLI Positions)" (PDF). OECD. 23 March 2023. Retrieved 30 March 2023.
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