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OECD Releases Guidance On Impact Of BEPS MLI

Friday, November 16, 2018

The OECD has provided a progress update on implementation of the BEPS multilateral instrument (BEPS MLI), which will become effective from January 1, 2019, and released advice for states on how to prepare guidance on the interpretation of changes to tax treaties.

The BEPS MLI, developed through negotiations involving more than 100 countries and jurisdictions as part of the OECD's BEPS project, is intended to enable countries to incorporate BEPS-related amendments into their tax treaties without having to renegotiate bilateral treaties on a piecemeal basis - a process that could take more than a decade to achieve.

According to the OECD, the MLI now covers 84 jurisdictions. It will become effective from the beginning of next year for the first 47 tax treaties concluded among the 15 jurisdictions that deposited their acceptance or ratification instrument.

The OECD has released new guidance in "Guidance for the Development of Synthesised Texts." These synthesized texts are intended to present a clear overview of the modifications to tax treaties resulting from the BEPS MLI. They are intended to provide comprehensive information to taxpayers, auditors, advisors, and other users on when the modifications will have effect in each jurisdiction.

Several jurisdictions have already started preparing synthesized texts on the basis of the guidance, taking into account their own publication requirements and practices. In September, Poland was the first jurisdiction to publish synthesized texts. The guidance is intended to ensure that governments can prepare these texts in a consistent manner.

Further, the OECD has issued a Secretariat note, which is intended to clarify the entry into effect rules for tax treaties of jurisdictions that deposited their ratification instruments last September.

The OECD said: "The Guidance and the Secretariat note are the most recent additions to a wide range of existing tools and background documents, including the popular MLI Matching Database. The OECD is also expanding the functionality of the database to include information on entry into effect. The new tools will be presented during a Webcast on the MLI scheduled for December. Information on timing and registration will be made available in due course."