Action 15: Multilateral Instrument (MLI)
BEPS Action 15 provides an analysis of the tax and legal issues related to the development of a multilateral instrument. This instrument enables participating countries to quickly and efficiently modify their network of double tax agreements to address the treaty-specific BEPS concerns outlined in the OECD’s Action 6, 7, 2 and 14 reports with the aim of preventing tax avoidance and improving dispute resolution.
A group of over 100 jurisdictions together drew up the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI). The text of the MLI was adopted in November 2016 and as at February 2019 had been signed by 87 countries, including the Isle of Man.
The MLI entered into force on 1 July 2018 following the fifth signatory jurisdiction to completing its ratification process. Tynwald ratified the MLI in October 2017, the Isle of Man was therefore one of the first five signatory jurisdictions to complete their ratification processes, the other four being the Republic of Austria (September 2017), Jersey (December 2017), Poland (January 2018) and Slovenia (22 March 2018).
Broadly speaking, the MLI modifies any bilateral double tax agreement (DTA) to which the Isle of Man is a party to include the strengthened provisions to the extent:
- both the Isle of Man and the other party choose to include that DTA as a Covered Tax Agreement; and
- both the Isle of Man and the other party choose to adopt the relevant article in a way compatible with each other’s choice.
In relation to provisions within the MLI that are not BEPS minimum standards (for example, the changes to the definition of permanent establishment), a party to the MLI is entitled to opt out of that provision by expressing a ‘reservation’; this has the effect that the provision in question does not apply to any of that party’s treaties. View a full list of the reservations made by the Isle of Man.
View a full list of all the Isle of Man’s DTAs. This page will be updated to show which of the Isle of Man DTAs have been modified by the MLI and will include a link to the synthesised text of the relevant agreement showing these modifications where available.
The OECD will also maintain a public list of Covered Tax Agreements, reservations and choices of options and a list of affected Covered Tax Agreement provisions online to make it easy for the public to find out which DTAs are modified by the MLI and to assist in determining how a particular Covered Tax Agreement is modified.