Signed | 7 June 2017 |
---|---|
Location | Paris, France |
Effective | 1 July 2018 |
Condition | 19 ratifications [1] |
Signatories | 101 [2] |
Parties | 85 [2] |
Depositary | Secretary-General of the Organisation for Economic Co-operation and Development |
Languages | English and French |
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, sometime abbreviated BEPS multilateral instrument, is a multilateral convention of the Organisation for Economic Co-operation and Development to combat tax avoidance by multinational enterprises (MNEs) through prevention of Base Erosion and Profit Shifting (BEPS). The BEPS multilateral instrument was negotiated within the framework of the OECD G20 BEPS project and enables countries and jurisdictions to swiftly modify their bilateral tax treaties to implement some of the measures agreed. [3]
The substance of the tax treaty-related BEPS measures (under BEPS Actions 2, 6, 7 and 14) was agreed as part of the Final BEPS Package. Accordingly, the negotiation on the text of the BEPS multilateral instrument was focused on how the BEPS multilateral instrument would need to modify the provisions of bilateral or regional tax agreements in order to implement those BEPS measures. [4]
The BEPS multilateral instrument was adopted on 24 November 2016 and signed on 7 June 2017 by 67 jurisdictions for the first signing ceremony. [2] As of July 2018, 83 jurisdictions have signed the BEPS multilateral instrument, covering more than 1,400 bilateral tax treaties. It entered into force on 1 July 2018, among the first jurisdictions that ratified it. [2]
The BEPS multilateral instrument looks to "prevent treaty abuse, improve dispute resolution, prevent the artificial avoidance of permanent establishment status and neutralise the effects of hybrid mismatch arrangements". [5] The BEPS multilateral instrument does not function in the same way as an amending protocol to a single existing treaty, which would directly amend the text of the existing tax treaty. Instead, it applies alongside the existing tax treaties. As stated in the Explanatory Statement [4] of the BEPS multilateral instrument this reflects the ordinary rule of treaty interpretation, as reflected in Article 30(3) of the Vienna Convention on the Law of Treaties, under which an earlier treaty between parties that are also parties to a later treaty will apply only to the extent that its provisions are compatible with those of the later treaty. With one convention, the signatory countries can achieve a work that would have taken decades otherwise. [6]
Consistent with the purpose of the BEPS multilateral instrument, which is to swiftly implement the tax treaty-related BEPS measures, the BEPS multilateral instrument also enables all parties to meet 2 of the 4 minimum standards which were agreed as part of the Final BEPS package. [7] Given, however, that each of those minimum standards can be satisfied in multiple different ways, and given the broad range of countries and jurisdictions involved in the development of the BEPS multilateral instrument, the BEPS multilateral instrument gives flexibilities with respect to ways of meeting it while remaining consistent with its purpose. [5] The BEPS multilateral instrument also provides flexibility by allowing to opt out of provisions which do not reflect a BEPS minimum standard. [4]
A list of ratified parties to the convention is shown below (as of September 2023). Of the 101 jurisdictions covered, 85 have deposited their instrument of ratification, approval or acceptance. [8]
Jurisdiction | Date of entry into force |
---|---|
Albania | 1 January 2021 |
Andorra | 1 January 2022 |
Armenia | 1 January 2024 |
Australia | 1 January 2019 |
Austria | 1 July 2018 |
Bahrain | 1 June 2022 |
Barbados | 1 April 2021 |
Belgium | 1 October 2019 |
Belize | 1 August 2022 |
Bosnia and Herzegovina | 1 January 2021 |
Bulgaria | 1 January 2023 |
Burkina Faso | 1 February 2021 |
Cameroon | 1 August 2022 |
Canada | 1 December 2019 |
Chile | 1 March 2021 |
China | 1 September 2022 |
Costa Rica | 1 January 2021 |
Croatia | 1 June 2021 |
Curaçao | 1 July 2019 |
Cyprus | 1 May 2020 |
Czech | 1 September 2020 |
Denmark | 1 January 2020 |
Egypt | 1 January 2021 |
Estonia | 1 May 2021 |
Finland | 1 June 2019 |
France | 1 January 2019 |
Georgia | 1 July 2019 |
Germany | 1 April 2021 |
Greece | 1 July 2021 |
Guernsey | 1 June 2019 |
Hong Kong | 1 September 2022 |
Hungary | 1 July 2021 |
Iceland | 1 January 2020 |
India | 1 October 2019 |
Indonesia | 1 August 2020 |
Ireland | 1 May 2019 |
Isle of Man | 1 July 2018 |
Israel | 1 January 2019 |
Ivory Coast | 1 January 2024 |
Japan | 1 January 2019 |
Jersey | 1 July 2018 |
Jordan | 1 January 2021 |
Kazakhstan | 1 October 2020 |
South Korea | 1 September 2020 |
Latvia | 1 February 2020 |
Lesotho | 1 November 2022 |
Liechtenstein | 1 April 2020 |
Lithuania | 1 January 2019 |
Luxembourg | 1 August 2019 |
Malaysia | 1 June 2021 |
Malta | 1 April 2019 |
Mauritius | 1 February 2020 |
Mexico | 1 July 2023 |
Monaco | 1 May 2019 |
Netherlands | 1 July 2019 |
New Zealand | 1 October 2018 |
Norway | 1 November 2019 |
Oman | 1 November 2020 |
Pakistan | 1 April 2021 |
Panama | 1 March 2021 |
Papua New Guinea | 1 December 2023 |
Poland | 1 July 2018 |
Portugal | 1 June 2020 |
Qatar | 1 April 2020 |
Romania | 1 June 2022 |
Russia | 1 October 2019 |
San Marino | 1 July 2020 |
Saudi Arabia | 1 May 2020 |
Senegal | 1 September 2022 |
Serbia | 1 October 2018 |
Seychelles | 1 April 2022 |
Singapore | 1 April 2019 |
Slovakia | 1 January 2019 |
Slovenia | 1 July 2018 |
South Africa | 1 January 2023 |
Spain | 1 January 2022 |
Sweden | 1 October 2018 |
Switzerland | 1 December 2019 |
Thailand | 1 July 2022 |
Tunisia | 1 November 2023 |
Ukraine | 1 December 2019 |
United Arab Emirates | 1 September 2019 |
United Kingdom | 1 October 2018 |
Uruguay | 1 June 2020 |
Vietnam | 1 September 2023 |
Corporate haven, corporate tax haven, or multinational tax haven is used to describe a jurisdiction that multinational corporations find attractive for establishing subsidiaries or incorporation of regional or main company headquarters, mostly due to favourable tax regimes, and/or favourable secrecy laws, and/or favourable regulatory regimes.
Transfer pricing refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control. Because of the potential for cross-border controlled transactions to distort taxable income, tax authorities in many countries can adjust intragroup transfer prices that differ from what would have been charged by unrelated enterprises dealing at arm’s length. The OECD and World Bank recommend intragroup pricing rules based on the arm’s-length principle, and 19 of the 20 members of the G20 have adopted similar measures through bilateral treaties and domestic legislation, regulations, or administrative practice. Countries with transfer pricing legislation generally follow the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations in most respects, although their rules can differ on some important details.
A tax treaty, also called double tax agreement (DTA) or double tax avoidance agreement (DTAA), is an agreement between two countries to avoid or mitigate double taxation. Such treaties may cover a range of taxes including income taxes, inheritance taxes, value added taxes, or other taxes. Besides bilateral treaties, multilateral treaties are also in place. For example, European Union (EU) countries are parties to a multilateral agreement with respect to value added taxes under auspices of the EU, while a joint treaty on mutual administrative assistance of the Council of Europe and the Organisation for Economic Co-operation and Development (OECD) is open to all countries. Tax treaties tend to reduce taxes of one treaty country for residents of the other treaty country to reduce double taxation of the same income.
Double taxation is the levying of tax by two or more jurisdictions on the same income, asset, or financial transaction.
Ireland's Corporate Tax System is a central component of Ireland's economy. In 2016–17, foreign firms paid 80% of Irish corporate tax, employed 25% of the Irish labour force, and created 57% of Irish OECD non-farm value-add. As of 2017, 25 of the top 50 Irish firms were U.S.–controlled businesses, representing 70% of the revenue of the top 50 Irish firms. By 2018, Ireland had received the most U.S. § Corporate tax inversions in history, and Apple was over one–fifth of Irish GDP. Academics rank Ireland as the largest tax haven; larger than the Caribbean tax haven system.
The arm's length principle (ALP) is the condition or the fact that the parties of a transaction are independent and on an equal footing. Such a transaction is known as an "arm's-length transaction".
MLI may refer to:
The Valletta Treaty (formally the European Convention on the Protection of the Archaeological Heritage (Revised), also known as the Malta Convention) is a multilateral treaty of the Council of Europe. The 1992 treaty aims to protect the European archaeological heritage "as a source of European collective memory and as an instrument for historical and scientific study". All remains and objects and any other traces of humankind from past times are considered to be elements of the archaeological heritage. The archaeological heritage shall include structures, constructions, groups of buildings, developed sites, moveable objects, monuments of other kinds as well as their context, whether situated on land or under water." (Art. 1)
A permanent establishment (PE) is a fixed place of business that generally gives rise to income or value-added tax liability in a particular jurisdiction. The term is defined in many income tax treaties and in most European Union Value Added Tax systems. The tax systems in some civil-law countries impose income taxes and value-added taxes only where an enterprise maintains a PE in the country concerned. Definitions of PEs under tax law or tax treaties may contain specific inclusions or exclusions.
The Tax Justice Network (TJN) is an advocacy group consisting of a coalition of researchers and activists with a shared concern about tax avoidance, tax competition, and tax havens.
David John Bradbury is an Australian former politician. He was a Labor member of the Australian House of Representatives, representing the Division of Lindsay, in New South Wales, from 2007 until 2013. Bradbury was the Minister for Competition Policy and Consumer Affairs, Assistant Treasurer, Minister Assisting for Financial Services and Superannuation, and Minister Assisting for Deregulation. He is currently the Head of Tax Policy and Statistics at the Organisation for Economic Co-operation and Development's Centre For Tax Policy and Administration.
A tax haven is a term, sometimes used negatively and for political reasons, to describe a place with very low tax rates for non-domiciled investors, even if the official rates may be higher.
Netherlands benefits from a strategic geographic location, a world-class economy, a stable political climate, and a skilled workforce. The Netherlands has a large network of tax treaties, a low corporate income tax rate and a full participation exemption for capital gains and profits. These characteristics, in addition to a favorable tax environment, make Netherlands one of the most open economies in the world for multinational corporations (MNCs).
The Double Irish arrangement was a base erosion and profit shifting (BEPS) corporate tax avoidance tool used mostly by United States multinationals since the late 1980s to avoid corporate taxation on non-U.S. profits. It was the largest tax avoidance tool in history and by 2010 was shielding US$100 billion annually in US multinational foreign profits from taxation, and was the main tool by which US multinationals built up untaxed offshore reserves of US$1 trillion from 2004 to 2018. Traditionally, it was also used with the Dutch Sandwich BEPS tool; however, 2010 changes to tax laws in Ireland dispensed with this requirement.
The Niue Treaty on Cooperation in Fisheries Surveillance and Law Enforcement in the South Pacific Region or Niue Treaty is a multilateral treaty of members of the Pacific Islands Forum Fisheries Agency to enhance their ability to enforce effectively their fisheries laws, and deter breaches.
The Common Reporting Standard (CRS) is an information standard for the Automatic Exchange Of Information (AEOI) regarding financial accounts on a global level, between tax authorities, which the Organisation for Economic Co-operation and Development (OECD) developed in 2014.
Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations where there is little or no economic activity, thus "eroding" the "tax-base" of the higher-tax jurisdictions using deductible payments such as interest or royalties. For the government, the tax base is a company's income or profit. Tax is levied as a percentage on this income/profit. When that income / profit is transferred to another country or tax haven, the tax base is eroded and the company does not pay taxes to the country that is generating the income. As a result, tax revenues are reduced and the government is detained. The Organisation for Economic Co-operation and Development (OECD) define BEPS strategies as "exploiting gaps and mismatches in tax rules". While some of the tactics are illegal, the majority are not. Because businesses that operate across borders can utilize BEPS to obtain a competitive edge over domestic businesses, it affects the righteousness and integrity of tax systems. Furthermore, it lessens deliberate compliance, when taxpayers notice multinationals legally avoiding corporate income taxes. Because developing nations rely more heavily on corporate income tax, they are disproportionately affected by BEPS.
The OECD G20 Base Erosion and Profit Shifting Project is an OECD/G20 project to set up an international framework to combat tax avoidance by multinational enterprises ("MNEs") using base erosion and profit shifting tools. The project, led by the OECD's Committee on Fiscal Affairs, began in 2013 with OECD and G20 countries, in a context of financial crisis and tax affairs. Currently, after the BEPS report has been delivered in 2015, the project is now in its implementation phase, 116 countries are involved including a majority of developing countries. During two years, the package was developed by participating members on an equal footing, as well as widespread consultations with jurisdictions and stakeholders, including business, academics and civil society. And since 2016, the OECD/G20 Inclusive Framework on BEPS provides for its 140 members a platform to work on an equal footing to tackle BEPS, including through peer review of the BEPS minimum standards, and monitoring of implementation of the BEPS package as a whole.
Ireland has been labelled as a tax haven or corporate tax haven in multiple financial reports, an allegation which the state has rejected in response. Ireland is on all academic "tax haven lists", including the § Leaders in tax haven research, and tax NGOs. Ireland does not meet the 1998 OECD definition of a tax haven, but no OECD member, including Switzerland, ever met this definition; only Trinidad & Tobago met it in 2017. Similarly, no EU–28 country is amongst the 64 listed in the 2017 EU tax haven blacklist and greylist. In September 2016, Brazil became the first G20 country to "blacklist" Ireland as a tax haven.
The global minimum corporate tax rate, or simply the global minimum tax, is a minimum rate of tax on corporate income internationally agreed upon and accepted by individual jurisdictions. Each country would be eligible to a share of revenue generated by the tax. The aim is to reduce tax competition between countries and discourage multinational corporations (MNC) from profit shifting to achieve tax avoidance.