Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS MLI) Signed

Earlier in June 2017 68 members of the OECD signed a tax treaty that has the effect of amending bilateral tax treaties on a wholesale basis. The purpose of the new BEPS MLI is to eliminate treaty shopping. Traditionally much offshore tax planning was to take benefit from differences in national tax rates, often through the use of a multi-jurisdictional structure which would benefit from tax rate differences in international tax treaties. This planning tool, referred to as treaty shopping, was routinely implemented by international tax lawyers and accountants doing cross border tax structuring. The new treaty is a known as a multilateral instrument or MLI and has the result of modifying bilateral tax treaties to which it applies.