THE MULTILATERAL INSTRUMENT (MLI)BEPS IMPLEMENTATION TAKING OFF

Maikel Evers – maikel.evers@oecd.orgOECD Centre for Tax Policy and Administration

Overview

1. The MLI in context

2. Functioning and legal nature of the MLI

3. Outcomes 7 June signing ceremony

4. What’s next

Overview

1. The MLI in context

2. Functioning and legal nature of the MLI

3. Outcomes 7 June signing ceremony

4. What’s next

fixed

base

4

Profit ShiftingBase Erosion

1890192019501980201020131869

5

2013February

July

October

November

BEPS background

report

Action Plan endorsed by

G20

Launch of BEPS

Package

G20 endorses

BEPS Package

Implementation phase

2015

TREATY

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end___

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PE-

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TREATY

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end___

_____

PE-

____

TREATY

___Divid

end___

_____

PE-

____

TREATY

___Divid

end___

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PE-

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6

Overview

1. The MLI in context

2. Functioning and legal nature of the MLI

3. Outcomes 7 June signing ceremony

4. What’s next

Legal conceptionOne

negotiation, one signature, one ratification

MLI sits alongside existing

bilateral tax treaties

modifying their application

Application of “later in time” rule – Article 30(3) of the

Vienna Convention

New for tax treaties but precedents

exist in other areas

MULTILATERAL

CONVENTION TO

IMPLEMENT TAX TREATY

RELATED MEASURES TO

PREVENT BASE EROSION

AND PROFIT SHIFTING

8

9

Specifying tax treaties covered

Meeting a minimum standard in another way

Opting out of non-minimum standard provisions

Opting out of provisions for treaties with specific characteristics

Choices to apply optional and alternative provision s (including opting in to Part VI on Arbitration)

MULTILATERAL

CONVENTION TO

IMPLEMENT TAX TREATY

RELATED MEASURES TO

PREVENT BASE EROSION

AND PROFIT SHIFTING

Mechanics – Elements of flexibility

10

Mechanics – Compatibility clauses

“in place of”

“applies to”

or

“modifies”

“in the absence of”

“in place of or

in the absence of”

EXISTING

TAX

AGREEMENT

EXISTING

TAX

AGREEMENT

EXISTING

TAX

AGREEMENT

EXISTING

TAX

AGREEMENT

EXISTING

TAX

AGREEMENT

MULTILATERAL

CONVENTION TO

IMPLEMENT TAX TREATY

RELATED MEASURES TO

PREVENT BASE EROSION

AND PROFIT SHIFTING

Overview

1. The MLI in context

2. Functioning and legal nature of the MLI

3. Outcomes 7 June signing ceremony

4. What’s next

69

MLI POSITIONS

PROVISIONAL

68 MULTILATERAL

CONVENTION TO

IMPLEMENT TAX TREATY

RELATED MEASURES TO

PREVENT BASE EROSION

AND PROFIT SHIFTING

Signatures

oe.cd/mli

12

Key figures

68Signatories

Matched agreements

69

+1,100

Jurisdictions covered

PA

CM

NG

EECI

JM

LB TN

Intentions to sign

13

Action 6 and Action 14

12

Principal Purposes Test

All

Supplementary S-LOB

44

Submission to both CAs

26

MAP Arbitration

19 7

14

Overview

1. The MLI in context

2. Functioning and legal nature of the MLI

3. Outcomes 7 June signing ceremony

4. What’s next

Domestic procedures

for ratification

Domestic procedures

for signature

16

February 2015 November 2016

June 2017 Entry into

Force

Entry into

Effect

Timeline

Additional signatures

17

Ratification

“Open offer” to treaty partners within the limits

of country’s own MLI Position

No need to return to parliament when a new country joins the MLI

Implementation requirements on

international level (same for all) and domestic

level (can be different)

Domestic requirements should follow usual

approach to tax treaty implementation

8

18

Entry into force

8

• Entry into force of the MLI• Ratification by 5 Signatories required

• Entry into force for each signatory• For the first 5• For other Signatories

19

Entry into effect

8

As of the latest date on which the MLI enters into force for each of the Contracting Jurisdictions

Go to the 1st day of the next calendar year

MLI provisions have effect as of 1

January

• Taxes withheld at source

1/12/2017 1/1/2018 1/1/2018

As of the latest date on which the MLI enters into force for each of the Contracting Jurisdictions

Expiration of a period of 6 months

Effect for taxes levied with respect to taxable periods beginning as of

that moment

• Other taxes (taxable periods)

1/12/2017 1/6/2018 e.g. 1/7/2018

20

Clarity: Application toolkit

Depositary tools

• Already online:

• Matching database – beta version online next week• To be further developed by Secretariat and ad hoc Group

MLI

POSI-

TIONS

“Articles 10(11), 11(10)

& 12(8) will be replaced

by Article 7(1).”

21

Consolidation and languages

• Consolidation• Legal relevance• Relevance for practice

• Language • EN & FR authentic • Covering 90% DTAs• Other languages available