United States

Multilateral Convention on treaty measures to prevent BEPS is signed


The signing ceremony for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting took place on June 7, 2017, at the headquarters of the OECD in Paris.

Ministers and high-level officials from 76 countries signed, or formally expressed their intention to sign, the multilateral convention designed to reduce the opportunity for tax avoidance by multinational enterprises. Notably, the United States is not a signatory to the Convention.

A link to a table of current signatories and parties to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting can be found here. Under the provisions of the Convention, each jurisdiction is required to provide a list of reservations and notifications at the time of signature. Specific positions can be found by clicking on the name of the jurisdiction in the table.

The Convention, which is the first multilateral treaty of its kind, will allow jurisdictions to incorporate the results from the OECD/G20 BEPS Project into existing bilateral tax treaties.

The large number of treaties in effect around the world would make implementing these changes on a treaty-by-treaty basis a very challenging process. Action 15 of the BEPS Project analyzed the possibility of developing a multilateral instrument in order to allow countries to swiftly amend their tax treaties to implement the tax treaty-related BEPS recommendations. The final report, Developing a Multilateral Instrument to Modify Bilateral Tax Treaties, concluded that such a multilateral instrument was not only feasible but also desirable. An ad hoc group was formed to develop a multilateral instrument and in November 2016 more than 100 countries concluded negotiations on it.

The Convention provides a vehicle for the swift implementation of the BEPS tax treaty based measures in the other Actions of the BEPS Action Plan including Hybrid Mismatches (Action 2), Treaty Abuse (Action 6), Artificial Avoidance of Permanent Establishment (Action 7), and Improving Dispute Resolution and Arbitration (Action 14).

The multilateral instrument will enter into force three months after the deposit of the fifth instrument of ratification, acceptance or approval. Six months after the instrument has entered into force, it will take effect for taxes levied (with the exception of taxes withheld at source).

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