Major step forward ininternational tax co-operation as additional countries sign landmark agreementto strengthen tax treaties
24/01/2018 - Ministers andhigh-level officials from Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panamaand Tunisia have today signed the BEPS Multilateral Convention bringing the total number of signatories to 78.ThisConvention updates the existing network of bilateral tax treaties and reducesopportunities for tax avoidance by multinational enterprises.
In addition to thosesigning today, Algeria, Kazakhstan, Oman and Swazilandhave expressed their intent to sign the Convention, and a number of otherjurisdictions are actively working towards signature by June 2018.Sofar, four jurisdictions – Austria, the Isle of Man,Jersey and Poland – have ratified the Convention, which will enter intoforce three months after a fifth jurisdiction deposits its instrument ofratification.
The Convention is the firstmultilateral treaty of its kind, allowing jurisdictions to integrate resultsfrom the OECD/G20 BEPS Project into their existing networks of bilateral taxtreaties.
“Today’ssigning of the multilateral convention is another major step towards updatingthe international tax rules through the swift implementation of the BEPSpackage,” said OECD Secretary-General Angel Gurría.
“Beyond savingsignatories from the burden of re-negotiating thousands of tax treatiesbilaterally, the convention results in more certainty and predictability forbusinesses, and a better functioning international tax system for the benefitof our citizens.”
The OECD/G20 BEPS Projectdelivers solutions for governments to close the gaps in existing internationalrules that allow corporate profits to « disappear » or be artificially shiftedto low or no tax environments, where companies havelittle or no economic activity. Revenue losses from BEPS areconservatively estimated at up to USD 240 billionannually, or the equivalent of up to 10% of global corporate income taxrevenues. Almost 100 countries and jurisdictions are currently workingin the Inclusive Framework on BEPS to implement BEPS measures in their domesticlegislation and bilateral tax treaties. The sheer number of bilateral treatiesmakes updates to the treaty network on a bilateral basis burdensome andtime-consuming.
The Convention, developedthrough inclusive negotiations involving more than 100 countries andjurisdictions under a mandate delivered by G20 Finance Ministers and CentralBank Governors, solves this problem. It will modify existing bilateral taxtreaties to swiftly implement the tax treaty measures developed in the course ofthe OECD/G20 BEPS Project. Treaty measures that are included in the Conventioninclude those on hybrid mismatch arrangements, treaty abuse and permanentestablishment, and dispute resolution, including an optional provision onmandatory binding arbitration, which has been taken up by 28 jurisdictions.
The OECD is the depositaryof the Convention and is supporting governments in the process of signature,ratification and implementation.
The text of the Convention,the explanatory statement, background information, database, and position ofeach signatory are available at http://oe.cd/mli.
Media queries should bedirected to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy andAdministration, (+33 6 26 30 49 23) or the OECD Media Office (+33 1 45 24 9700).
Working with over 100countries, the OECD is a global policy forum that promotes policies to improvethe economic and social well-being of people around the world.