(Lexology) -- In the Autumn Budget, the Chancellor announced that legislation will be included in the Finance Bill 2017-2018 (the “Finance Bill”) giving effect to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “Multilateral Instrument”).
The Multilateral Instrument implements aspects of the OECD’s BEPS project relating to hybrid mismatches, treaty abuse and avoidance of permanent establishment. By virtue of ratifying the Multilateral Instrument the UK government will implement the modifications to its existing bilateral double taxation treaties that the Multilateral Instrument is seeking to achieve. These modifications will apply once the Multilateral Instrument has come into force (see below) and the relevant tax treaty partner country has also effected ratification.
More than 70 countries have signed the Multilateral Instrument (access the full list of signatories here) and, so far, Austria and the Isle of Man have ratified the Multilateral Instrument. Five countries are required to ratify the Multilateral Instrument for it to apply. The Multilateral Instrument will be ratified by the United Kingdom upon Royal Assent of the Finance Bill.