Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting

Print Page

Download Treaty PDF

Treaty Code:

M2017-03

Treaty Type:

Multilateral

Common Name:

Multilateral instrument (MLI)

Responsible Department:

Inland Revenue

Administering Department:

Inland Revenue

Treaty Status:

In Force

Treaty Summary:

The G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan contains a number of recommendations to strengthen double tax agreements (DTAs). The amendments to the DTAs will address certain aspects of the BEPS project that have a treaty dimension e.g. treaty shopping or permanent establishment avoidance.

Worldwide there are over 3,000 DTAs that would potentially need to be renegotiated bilaterally to implement the OECD’s treaty recommendations. It would be very complex and time consuming for individual countries to implement the OECD’s recommended DTA amendments on a treaty-by-treaty basis. Therefore, the OECD has recommended a novel approach to the problem – a single multilateral instrument (the MLI) will be signed by a large number of OECD and non-OECD countries and this will swiftly amend the DTAs of participating jurisdictions. Ninety-six countries are members of the Ad Hoc group tasked with developing the MLI.

Going forward, the MLI provisions will be incorporated into the OECD’s model tax convention – so this becomes the new treaty “gold standard”.

The substantive issues the MLI addresses are:

preventing the granting of treaty benefits in inappropriate circumstances;
preventing the artificial avoidance of PE status;
neutralising the effects of hybrid mismatch arrangements that have a treaty aspect; and
providing improved mechanisms for effective dispute resolution.

The MLI will have effect under Article 35(1) for New Zealand's DTAs on a staggered basis depending on the timing of ratification by each respective treaty partner. Guidance on the date of effect for each DTA will be publicised on Inland Revenue's tax policy website as the relevant jurisdictions ratify the MLI (http://www.taxpolicy.ird.govt.nz/tax treaties).

Information about states who have signed, ratified or acceded to the MLI can be found on the OECD's website: http://www.oecd.org/tax/treaties/beps-mli-signatories-and-parties.pdf

A list of New Zealand reservations made under the MLI can be found on the OECD website: http://www.oecd.org/tax/treaties/beps-mli-position-new-zealand-instrument-deposit.pdf

NZ Adherence Status:

In Force

Adherence Type:

Ratified

Signature Date:

07/06/2017

Adherence Date:

Expired:

Date Concluded:

07/06/2017

Place Concluded:

Paris

Entry Into Force Date:

01/07/2018

NZ Entry Into Force Date:

01/10/2018

Termination Date:

Withdrawal Date:

Withdrawal Notification Date:

NZ Objections:

NZ Reservations:

Yes

NZ Declarations:

NZ Territorial Applications:

None

NZTS Number:

UNTS Number:

Associated Treaties:

Other References:

Treaty Text Link:

www.oecd.org/tax/treaties/multilateral-convention-to-implement-tax-treaty-related-measures-to-prevent-beps.htm

Parties:

Contact Information:

If you would like more information about this Treaty please contact us using our contact form.