21/03/2022 - The implementation of the BEPS package to tackle international tax avoidance continues to progress, as the OECD releases the latest peer review report assessing the actions taken by jurisdictions to prevent tax treaty shopping and other forms of treaty abuse under Action 6 of the OECD/G20 BEPS Project.
This peer review process, which includes data on tax treaties concluded by each of the 139 jurisdictions that were members of the OECD/G20 Inclusive Framework on BEPS on 31 May 2021, was the first to be carried out under the revised methodology forming the basis of the assessment of the Action 6 minimum standard.
The fourth peer review report (also available in French) reveals that members of the OECD/G20 Inclusive Framework on BEPS are respecting their commitment to implement the minimum standard on treaty shopping. It further demonstrates that the BEPS Multilateral Instrument (MLI) has been the tool used by the vast majority of jurisdictions that have begun implementing the BEPS Action 6 minimum standard, and that the MLI has continued to significantly expand the implementation of the minimum standard for the jurisdictions that have ratified it.
The impact and coverage of the MLI are expected to rapidly increase as jurisdictions continue their ratifications and as other jurisdictions with large tax treaty networks consider joining it. To date, the MLI covers 99 jurisdictions and over 1 800 bilateral tax treaties.
As one of the four minimum standards, BEPS Action 6 identified treaty abuse, and in particular treaty shopping, as one of the principal sources of BEPS concerns. Treaty shopping typically involves the attempt by a person to access indirectly the benefits of a tax agreement between two jurisdictions without being a resident of one of those jurisdictions. To address this issue, all members of the OECD/G20 Inclusive Framework on BEPS have committed to implementing the BEPS Action 6 minimum standard and participate in annual peer reviews to monitor its accurate implementation.
Media queries should be directed to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration (+33 1 45 24 91 08), or to Lee Harley, Head of the Tax Treaty Unit (+33 1 85 55 49 52).