Implementing BEPS initiatives through a multilateral instrument

OECD members and the G20 recognised the need for an innovative way to implement the BEPS initiatives. Consequently, they developed a multilateral instrument (MLI), which allows countries to swiftly modify their existing tax treaties with certain BEPS measures. 

In November 2016, a group of over 100 countries (developed and developing) concluded the MLI’s development. Participating countries are expected to sign it in June 2017. 

MLI will modify existing tax treaties

Rather than amending existing tax treaties (there are over 2,000 worldwide), the MLI will modify and supplement the application of bilateral tax treaties by implementing measures against: (i) tax treaty shopping, (ii) artificial avoidance of PE status, (iii) hybrid mismatches and (iv) improving dispute resolution. 

It is expected that the BEPS initiative and launch of the MLI will significantly change the taxation of international businesses, and the way they are structured and operated. 

To comply with local laws and international developments, it is essential to assess the impact of the BEPS-related initiatives, including this new MLI.

8th March 2017