The BEPS MLI will enter into force for Singapore on April 1, 2019.
On December 21, 2018, Singapore deposited with the OECD the Instrument of Ratification for the Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS MLI).
The BEPS MLI will enter into force for Singapore on April 1, 2019.
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, including Singapore.
Singapore signed the BEPS MLI in June 2017. Singapore intends to cover 86 of its existing tax treaties under the BEPS MLI.
Singapore has adopted the mandatory provisions contained in the BEPS MLI such as Article 6, Article 7 (principal purpose test), and Article 16 (mutual agreement procedure).
Singapore has also adopted certain non-mandatory provisions contained in the BEPS MLI such as a mandatory, binding arbitration to resolve tax disputes.
A covered tax agreement between Singapore and its tax treaty partner will be amended by the BEPS MLI after Singapore’s tax treaty partner deposits its instrument of ratification with the OECD. The amendments will take effect from the basis period following the expiration of a period of six months after the BEPS MLI enters into force for both jurisdictions.
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