The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("Multilateral Instrument" or "BEPS MLI") allows governments to modify existing bilateral tax treaties in a synchronised and efficient manner to implement the tax treaty measures developed during the BEPS Project, without the need to expend resources renegotiating each treaty bilaterally.
BEPS Multilateral Instrument
The Multilateral Instrument (BEPS MLI) offers concrete solutions for governments to close loopholes in international tax treaties by transposing results from the BEPS Project into bilateral tax treaties worldwide. The BEPS MLI allows governments to implement agreed minimum standards to counter treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty policies.
Key messages
In November 2016, over 100 jurisdictions concluded negotiations on the BEPS MLI that will swiftly implement a series of tax treaty measures to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises. The BEPS MLI already covers over 100 jurisdictions and entered into force on 1 July 2018. Signatories include jurisdictions from all continents and all levels of development and other jurisdictions are also actively working towards signature.
The BEPS MLI entered into force on 1 July 2018 and its provisions entered into effect for the first provisions on 1 January 2019. More information on entry into force and effect for each Party and their Covered Tax Agreements can be found in the list of Signatories and Parties (BEPS MLI Positions) and the BEPS MLI Toolkit & Database.
Only the signed English and French versions are the authentic BEPS MLI texts applicable.
Members of the "ad hoc Group" that negotiated the BEPS MLI have translated it into Arabic, Bulgarian, Chinese, Dutch, German, Greek, Italien, Japanese, Portuguese, Serbian, Spanish and Swedish.
These translations of the BEPS MLI in other languages are provided only for information purposes.
About
Base erosion and profit shifting (BEPS) refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid. Conservative estimates in January 2017 indicate annual losses of anywhere from 4 to 10% of global corporate income tax revenues, i.e. USD 100 - 240 billion annually.
Working together in the OECD/G20 BEPS Project, jurisdictions jointly developed 15 actions to tackle tax avoidance, improve the coherence of international tax rules and ensure a more transparent tax environment. Leaders of OECD and G20 countries, as well as other leaders, urged the timely implementation of this comprehensive BEPS package. The BEPS Multilateral Instrument (BEPS MLI) responds to this call for swift action by implementing the BEPS measures which require changes to tax treaties.
Context
A turning point in tax treaty history
"The conclusion of this multilateral instrument marks a new turning point in tax treaty history. We are moving towards rapid implementation of the far-reaching reforms agreed under the BEPS Project in more than 1,650 treaties worldwide. In addition to saving jurisdictions from the burden of bilaterally renegotiating these treaties, the “MLI” results in more certainty and predictability for businesses, and a better functioning international tax system for the benefit of our citizens." Angel Gurría OECD Secretary-General (2006 – 2021)
Action specific content
The Explanatory Statement to accompany the BEPS MLI provides clarification to the approach taken in the BEPS MLI and how each provision is intended to affect Covered Tax Agreements. It reflects the agreed understanding of the negotiators with respect to the Convention. It includes descriptions of the types of treaty provisions which are intended to be covered and the ways in which they are intended to be modified. The Explanatory Statement was adopted in English and French on 24 November 2016.
The OECD has developed a toolkit for the application of the BEPS MLI, including innovative tools to facilitate the interpretation and application of this innovative legal instrument. The toolkit will be expanded over time but includes guidance documents, interactive flowcharts, and the BEPS MLI matching database.
In accordance with Article 31(1) of the BEPS MLI, the Conference of the Parties to the BEPS MLI is responsible for taking any decisions or exercising any functions as may be required or appropriate under the provisions of the BEPS MLI.
