Friday, July 5, 2019
On June 21, 2019, Canada ratified the BEPS multilateral convention, to introduce amendments to its network of tax treaties to prevent abuse.
Canada signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) in June 2017. The MLI was developed through negotiations involving more than 100 countries and jurisdictions.
The MLI will allow Canada to modify its existing tax treaties to include measures developed under the OECD/G20 BEPS project without having to individually renegotiate these treaties. The instrument will implement minimum standards to counter treaty abuse, prevent the artificial avoidance of permanent establishment status, neutralize the effects of hybrid mismatch arrangements, and improve dispute resolution mechanisms.
Jurisdictions that sign the MLI must identify which of their treaties they wish the MLI to apply to and modify.
Canadian Finance Minister Bill Morneau said: "Our Government is committed to building an economy that helps people and businesses get ahead. To do that, we need a tax system that is effective and fair. The MLI will help us build on actions we've already taken to enhance the integrity of Canada's tax system – both at home and abroad – and give Canadians greater confidence that the system is working in their best interest."