BEPS Convention to Enter Into Force in July

BEPS Convention to Enter Into Force in July

The OECD’s Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS) will enter into force on July 1, 2018.

The development follows the deposit of the fifth instrument of ratification by Slovenia on March 22, 2018. Austria, the Isle of Man, Jersey, and Poland have previously deposited their instruments with the OECD.

The entry into force of the BEPS Convention on July 1, 2018, will bring it into legal existence in these five jurisdictions. In accordance with the rules of the BEPS Convention, its contents will start to have effect for existing tax treaties as from 2019.

The BEPS Convention, negotiated by over 100 countries and jurisdictions, will modify existing bilateral tax treaties to swiftly implement the tax treaty measures developed in the course of the BEPS project. Treaty measures that are included in the BEPS Convention include those on 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 28 signatories.

The OECD is the depositary of the BEPS Convention and is supporting governments in the process of signature, ratification, and implementation. The positions that each signatory and party under the BEPS Convention has adopted are available on the OECD website, together with an interactive database that provides insight into the likely impact on covered tax treaties.

OECD Secretary-General Angel Gurría said: “The entry into force of this Multilateral Convention marks a turning point in the implementation of OECD/G-20 efforts to adapt international tax rules to the 21st century. We are translating commitments into concrete legal provisions in more than 1,200 tax treaties worldwide. Thanks to this drive by the international community, we are ensuring that multinational companies pay their fair share when it comes to fulfilling tax obligations, like citizens do.”