Saudi Arabia has become the 84th tax jurisdiction to sign the base erosion and profit shifting (BEPS) Multilateral Convention.
The BEPS Convention, negotiated by over 100 countries and jurisdictions, updates the existing network of 1,400 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.
The BEPS Convention entered into force in July 2018 for Austria, the Isle of Man, Jersey, Poland, and Slovenia – all of which signed the Convention last year.
Recently, Serbia, Sweden, New Zealand, and the UK deposited their instrument of ratification with the OECD, and for these jurisdictions, the Convention will enter into force in October.
For Israel and Lithuania, the BEPS Convention will enter into force in January 2019.
In accordance with the rules of the BEPS Convention, its contents will start to have effect for existing tax treaties from 2019.