Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Multilateral Instrument)
Official Texts and Explanatory Statement of Multilateral Convention
Design and Function of the Convention
MLI Positions and policy considerations (by individual jurisdictions)
Matrix of Options and Reservations
Date of Entry into Force and Date of Entry into effect
The Official Texts and Explanatory Statement
The Multilateral Instrument (the MLI), developed by the OECD and endorsed by the G20, offers concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide. The MLI modifies the application of thousands of bilateral tax treaties concluded to eliminate double taxation.
Official texts of the MLI [read]
Explanatory Statement [read]
Legal notes on the functioning of the MLI under Public international law [read].
Design and Function of the Convention
The Convention is the first multilateral treaty of its kind, allowing jurisdictions to transpose results from the OECD/G20 BEPS Project into their existing bilateral tax treaties, transforming the way tax treaties are modified. The Convention has been designed to strengthen existing tax treaties concluded among its parties without the need for burdensome and time-consuming bilateral renegotiations.
The OECD/G20 BEPS Project delivers solutions for governments to close the gaps in existing international rules that allow corporate profits to « disappear » or be artificially shifted to low or no tax environments, where companies have little or no economic activity. The Convention will modify existing bilateral tax treaties to swiftly implement the tax treaty measures developed in the course of the OECD/G20 BEPS Project. Treaty measures that are included in the Convention include those on hybrid mismatch arrangements, treaty abuse and permanent establishment. The Convention also strengthens provisions to resolve treaty disputes, including through mandatory binding arbitration, which has been taken up by 28 signatories as at 7 June 2017.
The OECD Depositary
The OECD is the depositary of the Convention and is supporting governments in the process of signature, ratification and implementation.
MLI Positions and Policy Considerations (by individual country)
The MLI Position refers to the choices and options made by the Signatory or Party to the MLI and provided to the OECD Depositary on listed tax agreements, reservations and notifications of optional provisions chosen and existing treaty provisions.
Each jurisdiction is required to provide a provisional list of tax treaties covered by the Convention (Covered Tax Agreements), reservations and notifications (the "MLI Position") at the time of signature. Each Signatory must prepare and submit its "MLI Position" before signing the MLI.
The MLI Positions provided at the time of signature for the jurisdictions may be subject to changes. The definitive position for each jurisdiction will be provided upon the deposit by the Signatory of its instrument of ratification, acceptance or approval.
Policy considerations on MLI position by individual contracting jurisdictions
Policy conciderations give explanations for the MLI positions that individual conntries (contracting jurisdictions) have adopted with respect to the application of the MLI to tax treaties. One can obtain a better understanding of the MLI position of a contracting jurisdiction by examining the policy forumulation process of that contracting jurisdiction.
Date of Entry into Force
Multilateral Convention to Implement Tax Treaty Related Measurements to Prevent Base Erosion and Profit Shifting (the Convention) took effect on 1st July 2018.
Article 34(1) of the Convention provides that, the Convention entered into force on the first day of the month following the expiration of a period of three calendar months beginning on the date of deposit of the fifth instrument of ratification by Slovenia on 22 March 2018.
From 19 October 2017 to 23 January 2018, 4 jurisdictions, the Republic of Austria (22 September 2017), the Isle of Man (19 October 2017), Jersey (15 December 2017), and Poland (23 January 2018), Had deposited their instruments with the OECD. Consequently, the Convention came into force on 1st July 2018. That is, the 1st day of the month following the expiration of a period of 3 calendar months beginning on 22 March 2018 on the date of deposit of the instrument of ratification by Slovenia.
Article 34(2) of the Convention provides that for each Signatory ratifying, accepting, or approving this Convention after the deposit of the fifth instrument of ratification, acceptance or approval, the Convention shall enter into force on the first day of the month following the expiration of a period of three calendar months beginning on the date of the deposit by such Signatory of its instrument of ratification, acceptance or approval.
In June 2018, 4 more signatories, New Zealand, Serbia, Sweden, and the UK, deposited the instrument of ratification to the OECD depositary on 27th June, 5th June, 22nd June and 29th June respectively, which are referred to collectively as "the said date" hereafter.
The Multilateral Convention (the MLI) should enter into force for these 4 contracting jurisdictions on 1st Oct 2018, the first day of the month following the expiration of a period of 3 calendar months from the said dates on which the 4 contracting jurisdictions deposited their respective Instrument of Ratifications to the OECD Depositary.
Matrix of Options and Reservations
For information of MLI database - Matrix of Options and Reservations, please refer to the Matrix at OECD website [read]
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