Multilateral Convention to Implement Tax Treaty Related Measures (MLI)

India has ratified the Multilateral Convention to Implement Tax Treaty Related Measures (MLI) and deposited the instrument of ratification to Organisation for Economic Co-operation and Development (OECD).

Multilateral Convention to Implement Tax Treaty Related Measures

The Multilateral Convention to Implement Tax Treaty Related Measures aims to Prevent Base Erosion and Profit Shifting (BEPS). It seeks to swiftly implement a series of tax treaty measures to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises.

The treaty provides concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties.

Curbing Tax Evasion

The ratification of the convention will allow India to apply MLI alongside existing tax treaties to implement the BEPS measures

India can also amend double taxation avoidance agreements (DTAA) with the countries signatories to the convention to plug revenue leakages. The modification of the tax treaties will aid in curbing revenue loss through treaty abuse and base erosion and profit shifting strategies by ensuring that profits are taxed where substantive economic activities generating the profits are carried out.