THE MULTILATERAL INSTRUMENT (MLI)BEPS IMPLEMENTATION TAKING OFF
Maikel Evers – [email protected] Centre for Tax Policy and Administration
Overview
1. The MLI in context
2. Functioning and legal nature of the MLI
3. Outcomes 7 June signing ceremony
4. What’s next
Overview
1. The MLI in context
2. Functioning and legal nature of the MLI
3. Outcomes 7 June signing ceremony
4. What’s next
fixed
base
4
Profit ShiftingBase Erosion
1890192019501980201020131869
5
2013February
July
October
November
BEPS background
report
Action Plan endorsed by
G20
Launch of BEPS
Package
G20 endorses
BEPS Package
Implementation phase
2015
TREATY
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PE-
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TREATY
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PE-
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TREATY
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TREATY
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6
Overview
1. The MLI in context
2. Functioning and legal nature of the MLI
3. Outcomes 7 June signing ceremony
4. What’s next
Legal conceptionOne
negotiation, one signature, one ratification
MLI sits alongside existing
bilateral tax treaties
modifying their application
Application of “later in time” rule – Article 30(3) of the
Vienna Convention
New for tax treaties but precedents
exist in other areas
MULTILATERAL
CONVENTION TO
IMPLEMENT TAX TREATY
RELATED MEASURES TO
PREVENT BASE EROSION
AND PROFIT SHIFTING
8
9
Specifying tax treaties covered
Meeting a minimum standard in another way
Opting out of non-minimum standard provisions
Opting out of provisions for treaties with specific characteristics
Choices to apply optional and alternative provision s (including opting in to Part VI on Arbitration)
MULTILATERAL
CONVENTION TO
IMPLEMENT TAX TREATY
RELATED MEASURES TO
PREVENT BASE EROSION
AND PROFIT SHIFTING
Mechanics – Elements of flexibility
10
Mechanics – Compatibility clauses
“in place of”
“applies to”
or
“modifies”
“in the absence of”
“in place of or
in the absence of”
EXISTING
TAX
AGREEMENT
EXISTING
TAX
AGREEMENT
EXISTING
TAX
AGREEMENT
EXISTING
TAX
AGREEMENT
EXISTING
TAX
AGREEMENT
MULTILATERAL
CONVENTION TO
IMPLEMENT TAX TREATY
RELATED MEASURES TO
PREVENT BASE EROSION
AND PROFIT SHIFTING
Overview
1. The MLI in context
2. Functioning and legal nature of the MLI
3. Outcomes 7 June signing ceremony
4. What’s next
69
MLI POSITIONS
PROVISIONAL
68 MULTILATERAL
CONVENTION TO
IMPLEMENT TAX TREATY
RELATED MEASURES TO
PREVENT BASE EROSION
AND PROFIT SHIFTING
Signatures
oe.cd/mli
12
Key figures
68Signatories
Matched agreements
69
+1,100
Jurisdictions covered
PA
CM
NG
EECI
JM
LB TN
Intentions to sign
13
Action 6 and Action 14
12
Principal Purposes Test
All
Supplementary S-LOB
44
Submission to both CAs
26
MAP Arbitration
19 7
14
Overview
1. The MLI in context
2. Functioning and legal nature of the MLI
3. Outcomes 7 June signing ceremony
4. What’s next
Domestic procedures
for ratification
Domestic procedures
for signature
16
February 2015 November 2016
June 2017 Entry into
Force
Entry into
Effect
Timeline
Additional signatures
17
Ratification
“Open offer” to treaty partners within the limits
of country’s own MLI Position
No need to return to parliament when a new country joins the MLI
Implementation requirements on
international level (same for all) and domestic
level (can be different)
Domestic requirements should follow usual
approach to tax treaty implementation
8
18
Entry into force
8
• Entry into force of the MLI• Ratification by 5 Signatories required
• Entry into force for each signatory• For the first 5• For other Signatories
19
Entry into effect
8
As of the latest date on which the MLI enters into force for each of the Contracting Jurisdictions
Go to the 1st day of the next calendar year
MLI provisions have effect as of 1
January
• Taxes withheld at source
1/12/2017 1/1/2018 1/1/2018
As of the latest date on which the MLI enters into force for each of the Contracting Jurisdictions
Expiration of a period of 6 months
Effect for taxes levied with respect to taxable periods beginning as of
that moment
• Other taxes (taxable periods)
1/12/2017 1/6/2018 e.g. 1/7/2018
20
Clarity: Application toolkit
Depositary tools
• Already online:
• Matching database – beta version online next week• To be further developed by Secretariat and ad hoc Group
MLI
POSI-
TIONS
“Articles 10(11), 11(10)
& 12(8) will be replaced
by Article 7(1).”
21
Consolidation and languages
• Consolidation• Legal relevance• Relevance for practice
• Language • EN & FR authentic • Covering 90% DTAs• Other languages available