On 7 June 2017, United Kingdom has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Multilateral Instrument” or “MLI”) in Paris. Total 68 countries, including United Kingdom, signed the Convention, while another 8 jurisdictions have expressed their intent to sign shortly.
The Convention is a key outcome of the OECD Base Erosion and Profit Shifting (BEPS) project, which aims to ensure that multinationals pay tax in the jurisdiction where economic value is created or added.
Angel Gurría, OECD secretary-general, said: “The signing of this multilateral convention marks a turning point in tax treaty history. We are moving towards rapid implementation of the far-reaching reforms agreed under the BEPS Project in more than 1,100 tax treaties worldwide, and radically transforming the way that tax treaties are modified”.
“Beyond saving signatories from the burden of re-negotiating these treaties bilaterally, the new convention will result in more certainty and predictability for businesses, and a better functioning international tax system for the benefit of our citizens” he added.