On November 24, 2016 the OECD released a press release announcing that more than 100 jurisdictions have concluded negotiations on a multilateral instrument that will swiftly implement a series of tax treaty measures to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises. The OECD also announced that a signing ceremony will be held in June 2017 in Paris.
The OECD also released the English and French versions of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Hereafter: the MCI) to its press release as well as the English version of the Explanatory Statement to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (A French version will be released later).
The MCI contains 7 Parts and 39 Articles.
PART I. – SCOPE AND INTERPRETATION OF TERMS
Article 1 – Scope of the Convention
Article 2 – Interpretation of Terms
PART II. – HYBRID MISMATCHES
Article 3 – Transparent Entities
Article 4 – Dual Resident Entities
Article 5 – Application of Methods for Elimination of Double Taxation
Option A
Option B
Option C
PART III. – TREATY ABUSE
Article 6 – Purpose of a Covered Tax Agreement
Article 7 – Prevention of Treaty Abuse
Article 8 – Dividend Transfer Transactions
Article 9 – Capital Gains from Alienation of Shares or Interests of Entities Deriving their Value Principally from Immovable Property
Article 10 – Anti-abuse Rule for Permanent Establishments Situated in Third Jurisdictions
Article 11 – Application of Tax Agreements to Restrict a Party’s Right to Tax its Own Residents
PART IV. – AVOIDANCE OF PERMANENT ESTABLISHMENT STATUS
Article 12 – Artificial Avoidance of Permanent Establishment Status through Commissionnaire Arrangements and Similar Strategies
Article 13 – Artificial Avoidance of Permanent Establishment Status through the Specific Activity Exemptions
Option A
Option B
Article 14 – Splitting-up of Contracts
Article 15 – Definition of a Person Closely Related to an Enterprise
PART V. – IMPROVING DISPUTE RESOLUTION
Article 16 – Mutual Agreement Procedure
Article 17 – Corresponding Adjustments
PART VI. – ARBITRATION
Article 18 – Choice to Apply Part VI
Article 19 – Mandatory Binding Arbitration
Article 20 – Appointment of Arbitrators
Article 21 – Confidentiality of Arbitration Proceedings
Article 22 – Resolution of a Case Prior to the Conclusion of the Arbitration
Article 23 – Type of Arbitration Process
Article 24 – Agreement on a Different Resolution
Article 25 – Costs of Arbitration Proceedings
Article 26 – Compatibility
PART VII. – FINAL PROVISIONS
Article 27 – Signature and Ratification, Acceptance or Approval
Article 28 – Reservations
Article 29 – Notifications
Article 30 – Subsequent Modifications of Covered Tax Agreements
Article 31 – Conference of the Parties
Article 32 – Interpretation and Implementation
Article 33 – Amendment
Article 34 – Entry into Force
Article 35 – Entry into Effect
Article 36 – Entry into Effect of Part VI
Article 37 - Withdrawal
Article 38 – Relation with Protocols
Article 39 – Depositary
Click on the language of your choice to be forwarded to the text of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting in that language. (English or French)
Click here to be forwarded to the Explanatory Statement to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.
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