Important process of ratifying the BEPS MLI is on. In 2019-2020, the provisions will come into effect, says Akhilesh Ranjan.
The Indian Government is currently undergoing the domestic law process to ratify the OECD’s Multilateral Instrument to implement the tax treaty-related measures to tackle base erosion and profit shifting.
The announcement was made by Akhilesh Ranjan, member of India’s tax authority, the Central Board of Direct Taxes, at an international tax conference organized in Mumbai on 6-8 December, 2018.
The BEPS MLI, negotiated by over 100 countries and jurisdictions, updates the existing network of tax treaties and reduces opportunities for MNE tax avoidance. The BEPS MLI seeks to modify existing bilateral tax treaties to swiftly implement measures relating to hybrid mismatch arrangements, treaty abuse, and permanent establishment.
The BEPS MLI also strengthens provisions to resolve treaty disputes, including through mandatory binding arbitration, which has been taken up by over 25 countries.
India signed the BEPS MLI in June 2017. The Indian Government intends to cover 93 of India’s tax treaties under the BEPS MLI. India has expressed its reservation on the provision relating to mandatory, binding arbitration.
Lubna Kably of Times of India tweeted on December 6: “India participated with enthusiasm in the BEPS project. We hope and believe that it will lead to substantial changes in international tax rules. India has opted for most of the provisions of the BEPS MLI. Important process of ratifying the BEPS MLI is on. In 2019-2020, the provisions will come into effect, says Akhilesh Ranjan.”
The BEPS MLI will become effective on January 1, 2019, for the first 47 tax treaties concluded among the 15 tax jurisdictions that have already deposited their ratification instrument to the OECD. These 15 jurisdictions are: Australia, Austria, France, Isle of Man, Israel, Japan, Jersey, Lithuania, New Zealand, Poland, Serbia, Slovak Republic, Slovenia, Sweden, and the UK.
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at email@example.com