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BEPS Multilateral Instrument signed

8 June 2017

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (referred to as the Multilateral Instrument, or MLI) was signed by the Minister of Revenue Judith Collins in Paris today. This OECD measure targets base erosion and profit shifting (BEPS). It will enable signatory countries, including New Zealand, to quickly update existing double tax treaties to include articles on permanent establishment avoidance, treaty abuse, dispute resolution and hybrid mismatches.

New Zealand’s position on which of its tax treaties should be covered and which provisions it will adopt was contained in the officials’ issues paper New Zealand’s implementation of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, and this final position remains virtually unchanged. The OECD has published the full MLI positions of all signatories (including New Zealand) on its website. A report providing full details of the process for implementation and the effect of the MLI on New Zealand’s treaty network will be published on this website soon.

For more information see the Minister's media statement and OECD's information about the MLI.

Hon Judith Collins
Minister of Revenue

8 June 2017

Media statement

New Zealand signs OECD Multilateral Instrument

A new treaty signed in Paris this week is a significant step forward in the fight against base erosion and profit shifting (BEPS), says Revenue Minister Judith Collins.

"Many BEPS techniques involve tax treaty abuse. The Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting (known as the Multilateral Instrument) allows a worldwide network of several thousand tax treaties to be quickly updated to adopt recommendations from the OECD’s BEPS Action Plan.

"Renegotiating all these tax treaties bilaterally to include the OECD recommendations would be too time-consuming to be practical. The Multilateral Instrument is an innovative solution, which allows these treaties to be rapidly updated,” she says.

The Multilateral Instrument includes articles on “permanent establishment” avoidance, treaty abuse, dispute resolution and hybrid mismatches. These address the key treaty-related BEPS issues. The extent to which these provisions are incorporated into New Zealand’s treaties will depend on the final positions of both New Zealand and our treaty partners.

While these positions will be confirmed upon ratification, preliminary positions will be made available by the OECD on its website.

Once both parties have signed and ratified the Multilateral Instrument, it will prospectively modify most of New Zealand's existing bilateral treaties. It is likely that New Zealand’s treaties will begin to be modified from 2019.

Ms Collins says the signing of the Multilateral Instrument by a significant number of jurisdictions demonstrates the power of a global solution to the BEPS problem.

“This has been almost two years in the making and I am very proud that New Zealand was heavily involved in its development," says Ms Collins. [OECD Signing Ceremony for Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS]