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TJ topics: the MLI

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The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the multilateral instrument or MLI) is the final output of BEPS Action 15 and the result of 18 months’ work by an ad hoc group of 99 countries chaired by Mike Williams of the UK.

The purpose of the MLI is to enable the implementation of treaty related recommendations across multiple tax treaties without separate renegotiation. The main provisions cover: hybrid mismatches; treaty abuse; avoidance of PE status; and dispute resolution. Provision is made for mandatory binding arbitration, but only on an ‘opt-in’ basis.

So what is the state of play, and what do advisers need to know?

These four Tax Journal articles provide an expert guide:

  1. The multilateral convention to implement tax treaty related measures to prevent BEPS Sandy Bhogal and Kitty Swanson (Mayer Brown) review the MLI and explain how it will apply to the UK.
  2. The anti-abuse provisions Structures which are ‘too good to be true’ will be particularly affected, explains Heather Self (Pinsent Masons).
  3. Who loves SLOBs? The BEPS limitation on benefits article would hinder cross-border investment, write Dan Neidle and Jemma Dick (Clifford Chance). They explain why it’s likely to be of limited application and consider which countries are taking that route.
  4. How to interpret double tax treaties in light of MLI Some but not all double tax treaties are being amended by MLI. Jeremy Webster & Jamie Robson (Pinsent Masons) examines the application of the MLI to a given scenario, in the context of DTTs generally.