A host of national delegates have joined officials from the Organisation for Economic Co-operation and Development (OECD) in a formal signing ceremony for the group’s groundbreaking treaty to prevent base erosion and profit shifting (BEPS).
The ceremony took place at the organisation’s Paris headquarters on 7 June.
In a statement, the OECD said: “Today’s signing ceremony marks an important milestone in the international tax agenda, which is moving closer to the goal of preventing BEPS by multinational enterprises.
“The new convention, which is the first multilateral treaty of its kind, allows jurisdictions to transpose results from the OECD/G20 BEPS Project into their existing networks of bilateral tax treaties.
“It was developed through inclusive negotiations involving more than 100 countries and jurisdictions, under a mandate delivered by G20 finance ministers and Central Bank governors at their February 2015 meeting.”
The organisation added: “The OECD/G20 BEPS Project delivers solutions for governments to close the gaps in existing international rules that allow corporate profits to ‘disappear’, or be artificially shifted to low- or no-tax environments, where companies have little or no economic activity.
“Revenue losses from BEPS are conservatively estimated at $100-240bn annually – the equivalent of 4-10% of global, corporate income tax revenues.”
In his opening speech at the ceremony, OECD secretary general Angel Gurría said: “This convention puts an end to treaty shopping and will provide taxpayers with greater certainty through improvements to the Mutual Agreement Procedures.
“It also gives you the tools needed to implement mandatory binding arbitration, tackle hybrid mismatches and stop artificial avoidance of ‘permanent establishment’ status in your countries.
“And, crucially, it goes to the heart of our efforts… to help restore citizens’ trust in the fairness and transparency of global governance systems and the legitimacy of the processes underpinning global integration.”
Gurría added: “Renegotiating tax treaties has always been a significant hurdle. It’s time-consuming, resource-intensive and cumbersome.
“And that’s what makes this convention so remarkable. Tonight, with the strokes of your pens, you will begin amending more than 1,100 tax treaties. This would normally have taken decades!
“In moving so quickly, we have taken a big step towards levelling the global playing field. Tax treaties will now be fit for purpose, eliminating double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance.”