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Kazakhstan, Peru, and the UAE have signed the base erosion and profit shifting (BEPS) Multilateral Convention, the OECD has announced, adding that Estonia intends to sign the Convention on June 29.
With this round of signing, the total number of signatories and the total number of covered jurisdictions under the BEPS Convention stands at 79 and 81, respectively.
The signatures come a few days before the BEPS Convention enters into force on July 1, 2018, for five of the jurisdictions that signed last year. These five jurisdictions are: Austria, the Isle of Man, Jersey, Poland, and Slovenia.
Recently, Serbia, Sweden and New Zealand also deposited their instrument of ratification with the OECD, acting as the Depositary of the Convention. For these jurisdictions, the Convention will enter into force on October 1, 2018. More ratifications are expected in the coming months, the OECD said.
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 28 signatories.
In accordance with the rules of the BEPS Convention, its contents will start to have effect for existing tax treaties as from 2019.
Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration: “The new signatures and the imminent entry into force of this landmark agreement underlines governments’ commitment to update the international tax rules and ensure they are fit for purpose in the 21st Century.”