Finland has signed the Multilateral Convention (“Multilateral Instrument” or “MLI”) to implement tax treaty related measures to prevent base erosion and profit shifting (BEPS).
On 7 June 2017, the Minister for Foreign Trade and Development Kai Mykkänen signed the multilateral instrument to amend tax treaties to combat activities such as treaty shopping. The aims of the changes set out in the Convention include preventing unjustified advantages being gained through tax treaties and preventing the non-payment of taxes.
The BEPS Convention has been shaped in such a way that a country may decide not to adopt an optional provision given as a recommendation, and this is done by specifying a reservation regarding that provision. Furthermore, some of the minimum standards may be met in different, alternative ways.
Finland has selected those provisions of the Convention that are minimum standards: the preamble text under Article 6; the provisions of Article 7 on the prevention of treaty abuse; and the provisions of Article 16 on the mutual agreement procedure. In addition, Finland selected the provision under Article 17 on corresponding adjustments to the price, for inclusion in Finland’s tax treaties that do not yet incorporate this. Finland also selected arbitration under certain restrictions.