The OECD has published new guidance for the development of synthesised texts to facilitate the interpretation and application of tax agreements modified by the Multilateral Convention to Implement Tax Treaty Measures to Prevent Base Erosion and Profit Shifting (BEPS MLI).
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 MLI entered into force on July 1, 2018.
The BEPS MLI now covers 84 jurisdictions and will become effective on January 1, 2019, for the first 47 tax treaties concluded among the 15 jurisdictions that deposited their acceptance or ratification instrument.
The guidance, which was released on November 14, has been developed by the OECD Secretariat with input from the members of the Ad hoc Group on the BEPS MLI.
The guidance can be used by governments that intend to provide insight into the impact of the BEPS MLI on existing treaties. Synthesised Texts also provide comprehensive information to taxpayers, auditors, advisors, and other users on when the modifications will have effect in each jurisdiction.
Several jurisdictions have already started preparing Synthesised Texts on the basis of the guidance, taking into account their own publication requirements and practices, the OECD said. The OECD intends to ensure that interested parties can prepare synthesised texts in a consistent manner.
A Secretariat Note, also released on November 14, clarifies the entry into effect rules for tax treaties of jurisdictions that deposited their ratification instruments last September.