Australia, France, Japan, and the Slovak Republic have deposited their instruments of ratification of the OECD’s Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS).
For these four countries, the BEPS Convention would enter into force from January 1, 2019. The Convention entered into force last month for New Zealand, Serbia, Sweden, and the UK.
As at September 27, 2018, a total of 15 countries have deposited their instruments of ratification of the BEPS Convention. A total of 84 countries have signed the BEPS Convention till date.
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 (MNEs).
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 from 2019.