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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).
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. [ 1 ]
Action 15: Multilateral Instrument. Lays out the legal and technical difficulties the BEPS project faces in its mission to create a multilateral tax framework. [14] The Instrument is called Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting and entered into force on 1 July 2018.
[citation needed] Also in 2010, the 1988 Convention on Mutual Administrative Assistance in Tax Matters was amended to include automated exchange of tax information, a key instrument in fighting tax evasion, and expanding it to developing countries. [18] In 2013, a working group was formed to promote the automated exchange of tax information.
The treaty covers taxation of dividends and interest. Under this treaty, dividends that are paid to the other party will be taxed at the maximum of 5% of the total amount of dividend for legal entities as well as for individuals. This treaty reduces from 10% to 5% the limit for taxing paid interest.
The legality of Intergovernmental Agreements (IGAs) has been challenged on the basis that any agreement between governments which bind each government essential represents a treaty. As the United States constitution does not permit the Executive Branch to unilaterally implement treaties without the consent of the senate, many maintain that IGAs ...
The Convention on Mutual Administrative Assistance in Tax Matters is a convention to facilitate the entering into bilateral tax information exchange agreements between state parties. The Convention was developed by the OECD and the Council of Europe and was open for signature to members of both organizations on 25 January 1988, and entered into ...
The OECD expects many of these changes to be applied to currently existing tax treaties through the work based on Action 15 on Developing a Multilateral Instrument to Modify Bilateral Tax Treaties. [23] A large number of countries are involved in the negotiations that are expected to be concluded by the end of 2016. [24]