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BEPS multilateral instrument implementing order

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The government has published the draft Double Taxation Relief (Base Erosion and Profit Shifting) Order 2018, which will bring into effect in the UK the OECD’s ‘Multilateral convention to implement tax treaty related measures to prevent BEPS’. The convention enables jurisdictions to modify their existing bilateral tax treaties and contains arbitration provisions to help resolve treaty disputes. The convention is due to enter into force on 1 July 2018.

The Government intends to adopt the ‘anti-fragmentation’ rule under Article 13(4) of the convention, which prevents the fragmentation of activities to avoid the creation of a permanent establishment, but does not intend to adopt the other provisions in Article 13 (changes to the rules on specific activity exemptions). The anti-contract splitting rule in Article 14 is not necessary, as the UK has adopted the principal purpose test in Article 7(1).


Issue: 1393
Categories: News