Israel and Lithuania have newly deposited with the OECD their instrument of ratification for the Multilateral Instrument to implement tax treaty-related base erosion and profit shifting (BEPS) measures.
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 Convention 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 over 25 signatories.
In accordance with the rules of the BEPS Convention, its contents will start to have effect for existing tax treaties from 2019.
So far, a total of 83 countries have signed the BEPS Convention. Additionally, Algeria, Kenya, Lebanon, Oman, Swaziland, and Thailand have expressed their intent to sign the BEPS Convention.