Market leading insight for tax experts
View online issue

BEPS multilateral instrument on tax treaties signed at OECD

printer Mail

Ministers and high-level officials from more than 60 countries and jurisdictions signed the Multilateral Convention to Implement Tax Treaty Related Measures to prevent BEPS’ on 7 June at the OECD in Paris (see

The OECD published the agreed text for the convention in November 2016, following the conclusion of negotiations involving more than 100 countries. The multilateral convention has been developed under action 15 of the BEPS project and will provide minimum standards for modifying existing bilateral tax treaties. The mandate for the convention was delivered by G20 finance ministers and central bank governors at their February 2015 meeting.

The signing takes place during the annual 'OECD week', which brings together government officials and members of civil society from OECD and partner countries for debate on the most pressing social and economic challenges confronting society.

Marlies de Ruiter, EY’s global ITS tax policy leader, said: ‘The multilateral instrument is an important part of BEPS implementation through changes to the around 3,000 existing bilateral tax treaties. Traditionally, such bilateral renegotiations of tax treaties would take much more time and be less efficient. This is an innovative mechanism through which countries can change all, or at least a big part, of their existing tax treaties by just signing and ratifying one multilateral instrument.’
The signing of the convention is a ‘huge achievement’, said Heather Self of Pinsent Masons. ‘It will put another nail in the coffin of complex tax avoidance structures exploited by some big businesses. Those multinational corporations relying on tax treaties to funnel royalties via brass-plate companies to a tax haven should, by now, have recognised that the game is up and that they need to restructure their tax affairs.’
However, compromises had been made. ‘The final document allows for different options on implementation and it will be interesting to see how different interpretations align,’ Self said.
‘We expect an increase in international tax disputes as a result of the implementation of the measures recommended by the OECD, as countries will be implementing the recommendations in slightly different ways and at different speeds. This is a particular issue for UK groups as the UK has been keen to be an early adopter of many recommendations.’
‘A key part of the pact is to use arbitration as way to resolve international tax disputes,’ Self said. ‘We welcome this, but some will have concerns that not every country in the agreement has signed up for this part.’