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Germany, Pakistan Ratify The BEPS MLI

Tuesday, December 22, 2020

Germany and Pakistan have deposited their instrument of ratification with the OECD to bring into force the BEPS multilateral instrument for their networks of tax treaties.

Switzerland has also notified the OECD that it wishes to extend the BEPS MLI to its treaties with the Czech Republic and Lithuania.

The BEPS MLI is intended to enable countries to introduce amendments to their tax treaties to counter tax base erosion and profit shifting (BEPS) without having to renegotiate bilateral treaties on a piecemeal basis. The treaty amendments are intended to counter hybrid mismatch arrangements, which can result in double non-taxation or double deductions for the same income, and treaty abuse. In addition, provisions are added to prevent the avoidance of permanent establishment rules and they are intended also to improve dispute resolution.

59 jurisdictions have now ratified, accepted, or approved the BEPS MLI, of the 95 jurisdictions that have signed up to the pact. The BEPS MLI will enter into force for Germany and Pakistan on April 1, 2021.