09/12/19

INTERNATIONAL TAX: Six Countries sign Multilateral Pact.

As published on tax-news.com, Friday December 6, 2019.

At the tenth plenary meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes, five countries signed up to the multilateral convention on mutual administrative assistance in tax matters, and two countries signed up to the BEPS multilateral instrument.

The Multilateral Tax Convention provides for all forms of administrative assistance in tax matters: exchange of information on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers' rights.

The convention facilitates exchanges under the Common Reporting Standard – the new international tax transparency standard that provides for the automatic exchange of information on taxpayers' financial assets – as well as the automatic exchange of country-by-country reports.

The convention was signed by Benin, Bosnia and Herzegovina, Cabo Verde, Mongolia, and Oman, bringing the total number of countries party to the agreement to 135.

In addition, Kenya and Oman signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, commonly known as the BEPS MLI. Oman also signed the Common Reporting Standard Multilateral Competent Authority Agreement, and Tunisia signed the Country-by-Country Reporting Multilateral Competent Authority Agreement.

The BEPS MLI, developed through negotiations involving more than 100 countries and jurisdictions as part of the OECD's BEPS project, is intended to enable countries to incorporate BEPS-related amendments into their tax treaties without having to renegotiate bilateral treaties on a piecemeal basis - a process that could take more than a decade to achieve.

The treaty amendments are intended to counter hybrid mismatch arrangements, which can result in double non-taxation or double deductions for the same income, and treaty abuse. In addition, provisions are added to prevent the avoidance of permanent establishment rules and they are intended also to improve dispute resolution, with some countries additionally adopting an optional provision on mandatory binding arbitration.