Signing of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting
1. On June 7 (Paris time), Mr. Kentaro Sonoura, State Minister for Foreign Affairs attended the signing ceremony for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Convention to Implement Measures to Prevent BEPS) held in the Organisation for Economic Cooperation and Development (OECD) headquarters in Paris and signed the Convention.
2. The Convention is intended to introduce the tax treaty related measures, which are part of the measures developed under the base erosion and profit shifting (BEPS) project in order to prevent BEPS, into the existing tax treaties between the Parties to the Convention. The Convention enables the Parties to implement the tax treaty related measures to prevent BEPS with respect to a large number of their existing tax treaties at the same time and in an efficient manner.
3. The final reports of the BEPS project, published in October 2015, have recommended a wide variety of measures to tackle international tax avoidance conducted by multinational enterprises. Based on the recommendation under Action 15 of the BEPS project, the Convention was drafted through negotiations in which approximately 100 jurisdictions including Japan participated, was adopted at the negotiating meeting on November 24, 2016 and then was opened for signature for all countries and the specified territories on December 31, 2016. Since the true value of the BEPS project would be fully realized by being implemented in a globally coordinated way, the Government of Japan, as one of the countries which has taken the initiative in the BEPS project, has decided to sign the Convention at the signing ceremony held with the participation of 67 jurisdictions with a view to taking appropriate steps toward proper implementation of the achievement of the BEPS project.
4. The deposit of the instruments of ratification, acceptance or approval by five jurisdictions is required for the Convention to enter into force and the Convention will enter into force with respect to the five jurisdictions on the expiry of a specified period after the deposit of the fifth instrument. With respect to each of jurisdictions depositing the instrument of ratification, acceptance or approval thereafter, the Convention will enter into force on the expiry of a specified period after its deposit. The Convention will enter into effect with respect to a tax agreement covered by the Convention on the expiry of a specified period after the Convention has entered into force with respect to all of the parties to the tax agreement. In Japan, the approval of the Convention by the Diet is necessary in order for Japan to deposit such an instrument.
(Reference 1) BEPS Project
- BEPS Project [link to the website of the National Tax Agency](Japanese only)
(Reference 2) Texts and Key Points of the Convention
- Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (English (PDF) / Japanese (PDF))
- Key Points of the Convention to Implement Measures to Prevent BEPS (English (PDF) / Japanese (PDF))
Note: The Japanese text of the Convention is provisional, which was submitted to the Cabinet for its decision on signature to the Convention, and may be modified in the course of preparation for the submission of the Convention to the Diet.
(Reference 3) Choices of Application of the Convention