Australia has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Convention).
The Minister for Trade, Tourism and Investment, the Hon Steven Ciobo MP, signed the Convention for Australia at a ceremony hosted by the Organisation for Economic Cooperation and Development (OECD) in Paris on 7 June 2017. 67 other jurisdictions also signed the Convention, including 35 of Australia’s bilateral tax treaty partners.
The Convention is a key outcome of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, which aims to ensure that multinationals pay tax in the jurisdiction where economic value is created or added.
The Convention complements the Government’s Multinational Anti-avoidance Law, the Diverted Profits Tax and the Tax Avoidance Taskforce, and reinforces our efforts to level the playing field for Australian businesses.
Once in force, the Convention will modify most of Australia’s bilateral tax treaties to implement new integrity rules that will help prevent exploitation for tax avoidance purposes and improve tax treaty-based dispute resolution mechanisms.
In the absence of the Convention, Australia would have to introduce the new rules treaty by treaty, a process that could take decades.
Based on countries’ known adoption positions, the Convention will modify 30 of Australia’s bilateral tax treaties, those with Argentina, Belgium, Canada, Chile, China, the Czech Republic, Denmark, Fiji, Finland, France, Hungary, India, Indonesia, Ireland, Italy, Japan, Malta, Mexico, the Netherlands, New Zealand, Norway, Poland, Romania, Russia, Singapore, the Slovak Republic, South Africa, Spain, Turkey and the United Kingdom.
The extent to which the Convention will modify these treaties will depend on the final adoption positions taken by each country. Australia notified its adoption positions on a provisional basis, to be confirmed upon ratification of the Convention.
The Convention will enter into force after signatories have completed their domestic requirements and deposited their instruments of ratification with the OECD. Legislation will be introduced into the Australian Parliament as soon as practicable to give the Convention the force of law in Australia.
A copy of the text of the Convention and information on jurisdictions’ adoption of it is available on the OECD website. Information on the main features of the Convention and Australia’s provisional adoption provisions is available on the Treasury website.