The Swiss Federal Council on Wednesday adopted the dispatch on the OECD’s Multilateral Convention to implement tax treaty-related base erosion and profit shifting (BEPS) measures.
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 BEPS Convention will modify existing bilateral tax treaties to swiftly implement measures relating to 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 over 25 countries, including Switzerland.
The BEPS convention will initially adjust the Swiss tax treaties with Argentina, Austria, Chile, the Czech Republic, Iceland, Italy, Lithuania, Luxembourg, Mexico, Portugal, South Africa, and Turkey to the tax treaty-related minimum standards defined within the framework of the BEPS project.
“These countries are prepared to agree with Switzerland on the precise wording of the tax treaties to be adapted via the BEPS Convention,” the Federal Council noted.
Switzerland signed the BEPS Convention in June 2017. The Convention was approved by a majority in the subsequent consultation.