OECD releases peer review reports on tax treaty shopping and abuse

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OECD releases peer review reports on tax treaty shopping and abuse

The data compiled for this peer review demonstrate that the BEPS Multilateral Instrument has been the tool used by the vast majority of jurisdictions that have begun implementing the Action 6 minimum standard, and that the MLI has started to impact tax treaties of jurisdictions that have ratified it.

OECD releases peer review reports on treaty shopping and abuse

The OECD has released latest peer review report assessing jurisdictions’ efforts to prevent tax treaty shopping and other forms of treaty abuse under Action 6 of the BEPS project.

The report reveals that a large majority of members of the Inclusive Framework on BEPS are translating their commitment on treaty shopping into actions and are modifying their treaty network.

As one of the four minimum standards, BEPS Action 6 identified treaty abuse, and in particular treaty shopping, as one of the principal sources of BEPS concerns. All members of the Inclusive Framework committed to implementing the Action 6 minimum standard and participate in annual peer reviews to monitor its accurate implementation.

The latest report includes the aggregate results of the peer review and data on tax treaties concluded by each of the 137 jurisdictions that were members of the Inclusive Framework on June 30, 2020. The data compiled for this peer review demonstrate that the BEPS Multilateral Instrument (MLI) has been the tool used by the vast majority of jurisdictions that have begun implementing the Action 6 minimum standard, and that the MLI has started to impact tax treaties of jurisdictions that have ratified it.

The impact and coverage of the MLI are expected to rapidly increase as jurisdictions continue their ratifications and as other jurisdictions with large tax treaty networks consider joining it. To date, the MLI covers 95 jurisdictions and over 1700 bilateral tax treaties.

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 editor@transferpricingnews.com