What is the OECD multilateral instrument?

The Multilateral Instrument (MLI) is a groundbreaking mechanism to update the network of thousands of bilateral tax treaties that make up the international tax system. It aims to reduce opportunities for multinational corporations to reduce their tax burden through base erosion and profit shifting.

What is the purpose of the MLI?

The MLI modifies the application of thousands of bilateral tax treaties concluded to eliminate double taxation. It also implements agreed minimum standards to counter treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty policies.

What is MLI treaty?

This treaty, usually referred to as the Multilateral Instrument (MLI), was drafted by the OECD to facilitate the implementation of the recommendations made by the OECD’s BEPS Project to combat base erosion and profit-shifting by modifying the application of existing bilateral tax treaties.

What are minimum standards for MLI?

The minimum standard requires (i) the inclusion of an express statement in the Preamble stating the common intention to eliminate double taxation without creating opportunities for non-taxation or reduce taxation through tax evasion or avoidance, including through treaty shopping arrangements, and (ii) at least a PPT …

What is multilateral instrument?

The multilateral instrument is a treaty/ standard template, which is one element of the OECD BEPS project, designed to help implement the recommended measures to avoid tax treaty abuse. Countries will be able to use MLI framework to implement some of the BEPS action plans relating to double tax treaties.

What is the purpose of Beps?

What is BEPS? Base erosion and profit shifting (BEPS) refers to tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax.

Has the US signed the multilateral instrument?

Nearly 70 countries have signed the OECD’s multilateral instrument – but the U.S. isn’t one of them.

What is PPT in MLI?

Under the MLI provisions, Article 7 (which deals with prevention of treaty abuse and is applicable as a minimum standard) prescribes Principal Purpose Test (‘PPT’) as one of the measures to prevent treaty abuse.

What is multilateral Instrument India?

The multilateral instrument is a treaty/ standard template, which is one element of the OECD BEPS project, designed to help implement the recommended measures to avoid tax treaty abuse. India had notified a total of 93 tax treaties as CTAs to which it intends to apply the MLI.

What are multilateral instruments?

What is MLI? The multilateral instrument is a treaty/ standard template, which is one element of the OECD BEPS project, designed to help implement the recommended measures to avoid tax treaty abuse. Countries will be able to use MLI framework to implement some of the BEPS action plans relating to double tax treaties.

What are the 15 actions of Beps?

The 15 Action Points BEPS

• Address the tax challenges of the digital economy.
• Neutralize the effects of hybrid mismatch arrangements.
• Strengthen CFC rules.
• Limit base erosion via interest deductions and other financial payments.
• Counter harmful tax practices more effectively, taking into account transparency and substance.

What is a multilateral instrument?

The BEPS Multilateral Instrument or “MLI” enables jurisdictions to swiftly implement the treaty-based recommendations from the BEPS package, including some of the minimum standards. The MLI has been signed by over 75 jurisdictions and it represents one of the most important changes to cross-border tax norms in history.