Japan on September 26 deposited to the OECD the instrument of acceptance of the Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting.
The BEPS Convention will enter into force for Japan on January 1, 2019.
The BEPS Convention, negotiated by over 100 countries and jurisdictions, updates the existing network of bilateral tax treaties and reduces opportunities for tax avoidance by multinational enterprises. The BEPS Convention will modify existing bilateral tax treaties to swiftly implement measures relating to hybrid mismatch arrangements, treaty abuse, and permanent establishment.
The BEPS Convention also strengthens provisions to resolve treaty disputes, including through mandatory binding arbitration, which has been taken up by over 25 countries, including Japan.
The Convention applies to an existing tax treaty where both parties to that tax treaty have chosen to apply the Convention and where the Convention has entered into force for the parties. Japan’s tax treaties with the following countries will satisfy those requirements on January 1, 2019: Israel, New Zealand, Poland, Sweden, and the UK.