The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("Multilateral Instrument" or "BEPS MLI") allows governments to modify existing bilateral tax treaties in a synchronised and efficient manner to implement the tax treaty measures developed during the BEPS Project, without the need to expend resources renegotiating each treaty bilaterally.
BEPS Multilateral Instrument
The Multilateral Instrument (BEPS MLI) offers concrete solutions for governments to close loopholes in international tax treaties by transposing results from the BEPS Project into bilateral tax treaties worldwide. The BEPS MLI allows governments to implement agreed minimum standards to counter treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty policies.
Key messages
About
Base erosion and profit shifting (BEPS) refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid. Conservative estimates in January 2017 indicate annual losses of anywhere from 4 to 10% of global corporate income tax revenues, i.e. USD 100 - 240 billion annually.
Working together in the OECD/G20 BEPS Project, jurisdictions jointly developed 15 actions to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment. Leaders of OECD and G20 countries, as well as other leaders, urged the timely implementation of this comprehensive BEPS package. The BEPS Multilateral Instrument (BEPS MLI) responds to this call for swift action by implementing the BEPS measures which require changes to tax treaties.
Context
A turning point in tax treaty history
"The conclusion of this multilateral instrument marks a new turning point in tax treaty history. We are moving towards rapid implementation of the far-reaching reforms agreed under the BEPS Project in more than 1,650 treaties worldwide. In addition to saving jurisdictions from the burden of bilaterally renegotiating these treaties, the “MLI” results in more certainty and predictability for businesses, and a better functioning international tax system for the benefit of our citizens." Angel Gurría OECD Secretary-General (2006 – 2021)
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