BEPS: OECD announces Multilateral Instrument will come into force

United KingdomScotland

The OECD has recently announced that the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the "Multilateral Instrument") will come into force on 1 July 2018 (original announcement available here). The BEPS Multilateral Instrument will initially come into effect as between the first five countries to have ratified it, being Slovenia, the Republic of Austria, Isle of Man, Jersey and Poland.

The UK signed the Multilateral Instrument on 7 June 2017, and the ability of Parliament to ratify the Multilateral Instrument was clarified in Finance Act 2018, which received Royal Assent on 15 March 2018 (see enacted legislation here and HM Treasury's explanatory note as to the effect of the Finance Act 2018 on the ratification process here). A draft Order in Council to ratify the Multilateral Instrument is now before the House of Commons for approval (available here).

From ratification by the UK, the Multilateral Instrument will apply to tax treaties between the UK and any other countries that have also ratified the Multilateral Instrument, although there will be a grace period of six months to a year (depending on the taxes in question) after each new ratification.

For more about the Multilateral Instrument, please see our articles: UK takes steps to ratify the Multilateral Instrument on BEPS (here), BEPS: Update on Multilateral Instrument (here), BEPS: Multilateral Instrument Published (here), Business Implications of BEPS (here) and Current BEPS Action Items (here).