Multilateral BEPS Convention [ 中文 ]

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Multilateral Instrument, or the BEPS MLI)

MLI: Official Texts and Explanatory Statement of Multilateral Convention [the BEPS MLI]

MLI: Preventing Treaty Abuse Article [Article 7] New

MLI: Capital Gain Article [Article 13] New

MLI: Capital Gain Article [Article 13] - Australian Perspective [New]

MLI: Mutual Agreement Procedure [Article 16]

MLI: Date of Entry into Force [Article 34]

MLI: Date of Entry into Effect [Article 35]; for the modified version of article 35, see [here].  

• Examples showing the application of Articles 35(1), 35(2), 35(3), 35(4), and 35(5), subject to modification by article 35(7)(a) [Read] 

Unmodified version adopted	From India's perspective	From Japan's perspective	From the UK's perspective
Malta-Israel CTA Japan-Singapore CTA  Japan-United Kingdom CTA Malta-Singapore CTA Malta-United Kingdom CTA India-Israel CTA Japan-Israel CTA	India-Japan CTA India-Iceland CTA India-Sweden CTA India-United Kingdom CTA	Japan-Iceland CTA Japan-India CTA Japan-Sweden CTA Japan-United Kingdom CTA	India-UK CTA Iceland-UK CTA Japan-UK CTA Sweden-United Kingdom CTA

Entry into Effect under Article 35(5) - That applies to additional CTAs as a result of the extension of the list of CTAs pursuant to Article 29(5) [read];

Entry into Effect under Article 35(6) - Reservation for early adoption of MAP article, as provided in Article 35(4) [read]

Entry into Effect under Articles 35(7)(a)(i), (ii), (iii), (iv), (v), and (vi); see legal texts [here]

• Illustration 1: application of modified version of article 35 to the India-Singapore CTA, India-Russia CTA, and Singapore-Russia CTA [read]
• Illustration 2: application of modified version of article 35 to the Sweden-United Kingdom CTA [read]  

India, Russia, Singapore	India, Russia, the U.K.
[Modified version, article 35] India-Singapore CTA India-Russia CTA Russia-Singapore CTA	[Modified version, article 35] India-UK CTA India-Russia CTA Russia-UK CTA

• Entry into Effect under Articles 35(7)(a)(iii) and (iv) - Reservation that modifies the withdrawal of any reservations or the replacement of a reservation with a more limited reservation, previously made under Article 28(9) 
• Entry into Effect under Articles 35(7)(a)(v) and (vi) - Reservation that modifies the application of the notification required under Article 29(6) resulting from either the withdrawal (replacement) of a reservation, or an extension of the list of CTAs 

Entry into Effect under Articles 35(7)(a)(vii), (viii), (ix), and (x) - Reservation that modifies the entry-into-effect provisions under Part VI - Arbitration (Articles 18 - 26); legal texts [read]

Concluding Comment [read]

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The Official Texts and Explanatory Statement

 

The multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting (the multilateral Instrument, the MLI), developed by the OECD and endorsed by the G20, offers 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 worldwide. The MLI modifies the application of thousands of bilateral tax treaties concluded to eliminate double taxation without creating the opportunity for double non-taxation.

 

Official texts of the MLI [read]

Explanatory Statement [read]

Published opinions of the Conference of the Parties (Article 32(2), MLI)

• Opinion on Entry into effect under Article 35(1)(a), issued on 25 March 2021
• Opinion on Interpretation and Implementation Questions, issued on 20 May 2021
• Opinion on Implementation of Article 16 of the MLI (Mutual Agreement Procedure), issued on 30 September 2021
• Opinion on Application of the entry into effect of Part VI (Arbitration) and Article 36(1)(b) and (2) of the MLI, issued on 30 September 2021

Legal notes on the functioning of the MLI under Public international law [read]

Vienna Convention on the Law of Treaties [read]

Matrix of Options and Reservations [read]

For information on the matching of reservations and notifications under the MLI provisions, see the flow chart [here].

MLI positions and policy considerations at the country level [read] 

 

 

 

Treaty measures that are included in the Convention include those on hybrid mismatch arrangements, treaty abuse and permanent establishment. The Convention also strengthens provisions to resolve treaty disputes, including through mandatory binding arbitration, which has been taken up by 28 signatories as at 7 June 2017.

 

 

 

 

MLI Positions and Policy Considerations (by individual country)

The MLI Position refers to the choices and options made by the Signatory or Party to the MLI and provided to the OECD Depositary on listed tax agreements, reservations and notifications of optional provisions chosen and existing treaty provisions.

 

Each jurisdiction is required to provide a provisional list of tax treaties covered by the Convention (Covered Tax Agreements), reservations and notifications (the "MLI Position") at the time of signature. Each Signatory must prepare and submit its "MLI Position" before signing the MLI. 

 

The MLI Positions provided at the time of signature for the jurisdictions may be subject to changes. The definitive position for each jurisdiction will be provided upon the deposit by the Signatory of its instrument of ratification, acceptance, or approval. The MLI Positions for each jurisdiction are available [here].

 

 

Policy considerations on MLI position by individual contracting jurisdictions 

 

Policy considerations give explanations for the MLI positions that individual countries (contracting jurisdictions) have adopted with respect to the application of the MLI to tax treaties. One can obtain a better understanding of the MLI position of a contracting jurisdiction by examining the policy formulation process of that contracting jurisdiction.

 

• Australia [read], [Treasury Laws Amendment (OECD Multilateral Instrument) Bill 2018]
• China [read]
• ​Hong Kong, China [read], [Discussion Paper for Legislative Council Panel on Fiscal Affairs] 
• Japan [read]
• New Zealand [read], [Report of the Finance and Expenditure Committee]
• Republic of Ireland [read], [Ireland's approach to the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS 
• Singapore [read]
• United Kingdom [read]

​

 

 

 

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Matrix of Options and Reservations

 

On the basis of the MLI positions submitted by the Signatories and Parties, the OECD Secretarial has prepared and maintained a database of the Matrix of Options and Reservations. [read]

 

 

 

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[1] Introduction to the Entry into Force and Entry into Effect Articles

 

Article 34 contains the provisions for the entry-into-force date of the Convention with respect to a contracting jurisdiction. 

 

Article 35 contains the provisions for the entry-into-effect dates with respect to the CTAs of a contracting jurisdiction. Article 35(1) divides the modifications into two categories based on the type of taxation to which they apply. Article 35(1)(a) relates to the entry-into-effect provision with respect to the withholding tax, and Article 35(1)(b) relates to the entry into effect provision with respect to taxes other than the withholding taxes. 

 

In what follows, our analysis will cover the application of Article 34 (entry-into-force) and Article 35 (entry-into-effect) to the CTAs of some selected contracting jurisdictions. The concluding comments cover the use of opt-in provisions, opt-out provisions (reservations), and alternative provisions within the contexts of Article 35.

 

 

[2] Article 34 - Entry into Force

 

a) Legal texts of entry-into-force date

 

Article 34(1):  This Convention shall enter into force on the first day of the month following the expiration of a period of three calendar months beginning on the date of deposit of the fifth instrument of ratification, acceptance or approval.

 

Article 34(2): For each Signatory ratifying, accepting, or approving this Convention after the deposit of the fifth instrument of ratification, acceptance or approval, the Convention shall enter into force on the first day of the month following the expiration of a period of three calendar months beginning on the date of the deposit by such Signatory of its instrument of ratification, acceptance or approval.

 

In chronological order, 5 jurisdictions, the Republic of Austria (22 September 2017), the Isle of Man (19 October 2017), Jersey (15 December 2017), Poland (23 January 2018) and Slovenia (22 March 2018), deposited their instruments with the OECD Depositary. Consequently, the Convention came into force on 1st July 2018. That is, the 1st day of the month following the expiration of a period of 3 calendar months beginning on 22 March 2018, the date on which Slovenia deposited the instrument of ratification to the OECD Depositary.

 

• The entry-into-effect date for the U.K. shall begin on and after 1 April 2020 unilaterally under Article 35(1)(b). 
• But for the application of the MLI provision to the Malta-UK CTA, the entry-into-effect date for other taxes levied with respect to taxable period shall begin on or after 1 Oct 2019, which is 6 months from the latest of the entry-into-force date for each of the two contracting jurisdictions. The first taxable period begins on 1 Apr 2020 (corporate tax), and 6 Apr 2020 (income tax and capital gains tax) respectively.
• In this regard, the entry-into-effect article shall apply asymmetrically with respect to the Malta-United Kingdom covered tax agreement.

 

[iv] Illustrated examples - symmetrical application of entry-into-effect provision under Article 35(2) with respect to withholding tax, and asymmetrical application of entry-into-effect provision under Article 35(1)(b) and Article 35(3) with respect to other taxes

 

Example D: Entry-into-effect date under India-Israel CTA

 

		India	Israel
(1)	Date of deposit of instrument of ratification	25 Jun 2019	13 Sept 2018
(2)	CTA Entry into force on 01 Oct 2019	01 Oct 2019	01 Jan 2019
(3)	CTA Entry into effect (unilateral)	01 April 2020	01 July 2019
(4)	CTA Entry into effect (bilateral) - WHT	Articles 35(1)(a), 35(2)	Articles 35(1)(a), 35(2)
	Article 35(2) shall have effect in India (Israel) with respect to a CTA, with respect to taxes withheld at source on amount paid or credited to non-residents (WHT), where the event giving rise to WHT occurs on or after 1st day of the next taxable period beginning on or after the later of (2).	1 Oct 2019 the taxable period runs from 1st Apr to 31st March each year	1 Oct 2019 the taxable period runs from 1st Jan to 31st Dec each year
(5)	CTA Entry into effect (bilateral) - all other tax (non-WHT)	Article 35(1)(b)	Articles 35(1)(b), 35(3)
	Article 35(1)(b) shall have effect with respect to the CTA, for all other taxes levied by India, for taxes levied with respect to the taxable periods beginning on or after expiration of a period of 6 calendar months (2019-10-01 to 2020-03-31) from the later of entry-into-force date in (2) above.	01 April 2020 The taxable period runs from 1st April to 31st March in India
	Article 35(3) shall have effect with respect to the CTA, for all other taxes levied by Israel, for taxes levied with respect to taxable periods beginning on or after 1 January of the next year (2021) beginning on or after the expiration of a period of 6 calendar months (2019-10-01 to 2020-03-31) from the later of the entry-into-force dates in (2).		01 Jan 2021 The taxable period runs from 1st Jan to 31st Dec in Israel

 

A) Both India and Israel adopt the alternative rule under Article 35(2) with respect to withholding taxes. But India adopts article 35(1)(b) and Israel adopts article 35(3) with respect to other taxes. Therefore, the entry-into-effect provision shall apply asymmetrically with respect to other taxes.

 

B) For India, the taxable period runs from 1st April to 31st March each year. For Israel, the taxable period runs from 1st Jan to 31st Dec each year.

 

[v] Illustrated examples - asymmetrical application of entry-into-effect provision under Article 35(1)(a) and Article 35(2) with respect to withholding tax, and asymmetrical application of entry-into-effect provision under Article 35(1)(b) and Article 35(3) with respect to other taxes

 

Example E: Entry-into-effect date under Japan-Israel CTA

 

		Japan	Israel
(1)	Date of deposit of instrument of ratification	26 Sept 2018	13 Sept 2018
(2)	CTA Entry-into-force date	01 Jan 2019	01 Jan 2019
(3)	CTA Entry into effect (unilateral)	01 July 2019	01 July 2019
(4A)	CTA Entry into effect (bilateral) for WHT	Article 35(1)(a)	Articles 35(1)(a), 35(2)
	Article 35(1)(a) shall have effect in Japan, with respect to taxes withheld at sournce on amount paid or credited to non-residents (WHT), where the event giving rise to WHT occurs on or after 1st day of next calendar year beginning on or after the later of entry-into-force date in (2).	1 Jan 2019
	Article 35(2) shall have effect in Israel, with respect to taxes withheld at source on amount paid or credited to a non-resident, where the event giving rise to WHT occurs on or after 1st day of the next taxable period beginning on or after the later of (2).		1 Jan 2019 (the taxable period runs from 1st Jan to 31st Dec each year)
(4B)	CTA Entry into effect (bilateral) - all other tax (non-WHT)	Article 35(1)(b)	Articles 35(1)(b), 35(3)
	Article 35(1)(b) shall have effect with respect to the CTA, for all other taxes levied by Japan, for taxes levied with respect to the taxable periods beginning on or after an expiration of a period of 6 calendar months (2019-01-01 to 2019-06-30) from the later of the entry-into-force date in (2) above.	01 July 2019 (the taxable period runs from 1st Jan to 31st Dec for individuals)
	Article 35(3) shall have effect with respect to the CTA, for all other taxes levied by Israel, for taxes levied with respect to taxable periods beginning on or after 1 January of the next year (2020) beginning on or after the expiration of a period of 6 calendar months (2019-01-01 to 2019-06-30) from the later of the entry-into-force date in (2).		01 Jan 2020 (the taxable period runs from 1st Jan to 31st Dec in Israel)

 

Country Survey - Article 35(2)

 

As of 28th Feb 2020, 7 countries/jurisdictions have chosen to adopt Article 35(2) with respect to the entry-into-effect provision for withholding taxes.

• Definitive (entry into force): India, Israel, and Mauritius;
• Provisional (signed but not in force): Hong Kong, Papua New Guinea;
• To be confirmed: Pakistan, and Denmark

 

Country Survey - Article 35(3)

 

As of 28 Feb 2020, 31 contracting jurisdictions that have signed the MLI,

• 10 of them have deposited the instrument of ratification confirming that they adopted the alternative rule as provided under Article 35(3) with respect to taxes other than withholding taxes, as shown in table below;
• 20 of them have set out their positions provisionally, but have not deposited the instrument of ratification to bring the MLI into force;
• 1 of them has not confirmed their positions.

​

						Entry into Effect
					Article	35
					Paragraph	2	3	6	7
MLI Matching Database beta [extracts]					Subparagraph				a
					Clause
No	Jurisdiction	Signature	Deposit ratification instrument	Entry into Force	Status of List	2	3	6	7
6	Austria	07/06/2017	22/09/2017	01/07/2018	Definitive		x
24	Denmark	07/06/2017	30/09/2019	01/01/2020	Definitive		x
28	Finland	07/06/2017	25/02/2019	01/06/2019	Definitive		x	x
37	Iceland	07/06/2017	26/09/2019	01/01/2020	Definitive		x	x
42	Israel	07/06/2017	13/09/2018	01/01/2019	Definitive	x	x	x
46	Jersey	07/06/2017	15/12/2017	01/07/2018	Definitive		x	x
57	Malta	07/06/2017	18/12/2018	01/04/2019	Definitive		x
76	Russia	07/06/2017	18/06/2019	01/10/2019	Definitive		x	x	x
87	Sweden	07/06/2017	22/06/2018	01/10/2018	Definitive		x		x
94	Uruguay	07/06/2017	06/02/2020	01/06/2020	Definitive		x	x

 

 

 

 

 

[4] Article 35(4): Provision to which Article 16 - Mutual Agreement Procedure applies

 

a) Entry into effect with respect to Mutual Agreement Procedure

 

Article 35(4) provides that Article 16 (MAP) shall have effect with respect to a CTA for a case presented to the competent authority of a contracting jurisdiction on or after the latest of the dates on which the MLI comes into force for each of the contracting jurisdictions to the CTAs, except for cases that were not eligible to be presented as of that date under the CTA prior to its modification by the MLI.  Article 35(4) shall apply without regard to the taxable period to which the case relates.

 

b) Early access to MAP by taxpayers

 

Article 35(4) is a special rule for MAP requests made under Article 16. As the Explanatory Statement to the MLI clarifies, paragraph 4 of Article 35 is intended to ensure that the provision of the MLI apply as soon as possible after the entry into force date, regardless of the taxable period to which a specific case shall apply.

 

The exception as mentioned above is intended to ensure the MLI would not "revive" cases that had been ineligible for MAP prior to the entry into force of the MLI.

 

 

 

[5] Article 35(5): New CTA(s) resulting from an extension under Article 29(5) of the list of covered tax agreements under Article 2(1)(a) 

 

a) Extension of the list of CTAs [after the MLI came into force]

 

Article 35(5) provides that the provisions of this Convention shall have effect in each Contracting Jurisdiction:

a) with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after the first day of the next calendar year that begins on or after 30 days after the date of the communication by the Depositary of the notification of the extension of the list of agreements; and

b) with respect to all other taxes levied by that Contracting Jurisdiction, for taxes levied with respect to taxable periods beginning on or after the expiration of a period of nine calendar months (or a shorter period, if all Contracting Jurisdictions notify the Depositary that they intend to apply such shorter period) from the date of the communication by the Depositary of the notification of the extension of the list of agreements.

 

b) Provision providing for the asymmetric application of Article 35(1) and Article 35(5)

 

Article 35(2) provides that "[s]olely for the purpose of its own application of subparagraph a) of paragraph 1 and subparagraph a) of paragraph 5, a Party may choose to substitute "taxable period" for "calendar year", and shall notify the Depositary accordingly.

 

Article 35(3) provides that "[s]olely for the purpose of its own application of subparagraph b) of paragraph 1 and subparagraph b) of paragraph 5, a Party may choose to replace the reference to "taxable periods beginning on or after the expiration of a period" with a reference to "taxable periods beginning on or after 1 January of the next year beginning on or after the expiration of a period", and shall notify the Depositary accordingly."

 

 

 

[6] Article 35(6): Reservation relating to the application of Article 35(4) to the Mutual Agreement Article

 

Article 35(6) provides that a contracting jurisdiction may reserve the right for Article 35(4) not to apply to its CTAs.

 

Where a contracting jurisdiction makes a reservation under Article 35(6), it chooses not to use the fast track to make a MAP request to the competent authority of either contracting jurisdiction. If so, the normal procedure under article 35(1) shall apply.

 

Country Survey - Article 35(6)

 

Up to 28th Feb 2020, 12 contracting jurisdictions that have opted out of Article 35(4) not to use the fast track for a MAP request, pursuant to Article 35(6). Those contracting jurisdictions are listed as per the following table:

​

Status as of 28 February 2020
						Entry into Effect
					Article	35
					Paragraph	2	3	6	7
MLI Matching Database beta [extracts]					Subparagraph				a
					Clause
No	Jurisdiction	Signature	Deposit ratification instrument	Entry into Force	Status of List	2	3	6	7
28	Finland	07/06/2017	25/02/2019	01/06/2019	Definitive		x	x
31	Georgia	07/06/2017	29/03/2019	01/07/2019	Definitive			x
34	Guernsey	07/06/2017	12/02/2019	01/06/2019	Definitive			x
37	Iceland	07/06/2017	26/09/2019	01/01/2020	Definitive		x	x
41	Isle of Man	07/06/2017	25/10/2017	01/07/2018	Definitive			x
42	Israel	07/06/2017	13/09/2018	01/01/2019	Definitive	x	x	x
46	Jersey	07/06/2017	15/12/2017	01/07/2018	Definitive		x	x
58	Mauritius	05/07/2017	18/10/2019	01/02/2020	Definitive	x		x
66	Norway	07/06/2017	17/07/2019	01/11/2019	Definitive			x
73	Portugal	07/06/2017	28/02/2020	01/06/2020	Definitive			x
76	Russia	07/06/2017	18/06/2019	01/10/2019	Definitive		x	x	x
94	Uruguay	07/06/2017	06/02/2020	01/06/2020	Definitive		x	x

 

 

 

 

 

[7] Article 35(7): Reservations relating to the application of Article 35(7)(a)(i) and (ii) to articles 35(1), (4), and (5)

 

Article 35(7)(a) provides that a contracting jurisdiction may reserve the right to replace

 

i) the references in paragraphs 1 and 4 to "the latest of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement"; and

ii) the references in paragraph 5 to "the date of the communication by the Depositary of the notification of the extension of the list of agreements";

 

with reference to "30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the provisions of this Convention with respect to that specific Covered Tax Agreement".

 

iii) the references in Article 28(9)(a) to “on the date of the communication by the Depositary of the notification of withdrawal or replacement of the reservation”; and

iv) the reference in Article 28(9)(b) to “on the latest of the dates on which the Convention enters into force for those Contracting Jurisdictions”;

 

with references to “30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the withdrawal or replacement of the reservation with respect to that specific Covered Tax Agreement”;

 

 

Table E1: Reservations that a contracting jurisdiction may choose to make with respect to the covered tax agreements, pursuant to Articles 35(7)(a)(i) to 35(7)(a)(vi)

Provisions under Articles 28, 29, 35 excluding 35(7)(a), and 36	Provisions under Article 35(7)(a)
Article 35	Article 35(7) (a) A Party may reserve the right to replace:
1. The provisions of this Convention shall have effect in each Contracting Jurisdiction with respect to a Covered Tax Agreement: a) with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after the first day of the next calendar year that begins on or after the latest of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement; and b) with respect to all other taxes levied by that Contracting Jurisdiction, for taxes levied with respect to taxable periods beginning on or after the expiration of a period of six calendar months (or a shorter period, if all Contracting Jurisdictions notify the Depositary that they intend to apply such shorter period) from the latest of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement. 4. Notwithstanding the preceding provisions of this Article, Article 16 (Mutual Agreement Procedure) shall have effect with respect to a Covered Tax Agreement for a case presented to the competent authority of a Contracting Jurisdiction on or after the latest of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement, except for cases that were not eligible to be presented as of that date under the Covered Tax Agreement prior to its modification by the Convention, without regard to the taxable period to which the case relates. 5. For a new Covered Tax Agreement resulting from an extension pursuant to paragraph 5 of Article 29 (Notifications) of the list of agreements notified under clause ii) of subparagraph a) of paragraph 1 of Article 2 (Interpretation of Terms), the provisions of this Convention shall have effect in each Contracting Jurisdiction: a) with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after the first day of the next calendar year that begins on or after 30 days after the date of the communication by the Depositary of the notification of the extension of the list of agreements; and b) with respect to all other taxes levied by that Contracting Jurisdiction, for taxes levied with respect to taxable periods beginning on or after the expiration of a period of nine calendar months (or a shorter period, if all Contracting Jurisdictions notify the Depositary that they intend to apply such shorter period) from the date of the communication by the Depositary of the notification of the extension of the list of agreements	i) the references in Articles 35(1) and (4) to “the latest of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement”; and ii) the references in Article 35(5) to “the date of the communication by the Depositary of the notification of the extension of the list of agreements”; with references to “30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the provisions of this Convention with respect to that specific Covered Tax Agreement”;
Article 28 (Reservations), paragraphs (9)(a) and (b)
9. Any Party which has made a reservation in accordance with paragraph 1 or 2 may at any time withdraw it or replace it with a more limited reservation by means of a notification addressed to the Depositary. Such Party shall make any additional notifications pursuant to paragraph 6 of Article 29 (Notifications) which may be required as a result of the withdrawal or replacement of the reservation. Subject to paragraph 7 of Article 35 (Entry into Effect), the withdrawal or replacement shall take effect: a) with respect to a Covered Tax Agreement solely with States or jurisdictions that are Parties to the Convention when the notification of withdrawal or replacement of the reservation is received by the Depositary: i) for reservations in respect of provisions relating to taxes withheld at source, where the event giving rise to such taxes occurs on or after 1 January of the year next following the expiration of a period of six calendar months beginning on the date of the communication by the Depositary of the notification of withdrawal or replacement of the reservation; and ii) for reservations in respect of all other provisions, for taxes levied with respect to taxable periods beginning on or after 1 January of the year next following the expiration of a period of six calendar months beginning on the date of the communication by the Depositary of the notification of withdrawal or replacement of the reservation; and b) with respect to a Covered Tax Agreement for which one or more Contracting Jurisdictions becomes a Party to this Convention after the date of receipt by the Depositary of the notification of withdrawal or replacement: on the latest of the dates on which the Convention enters into force for those Contracting Jurisdictions.	iii) the references in Article 28(9)(a) to “on the date of the communication by the Depositary of the notification of withdrawal or replacement of the reservation”; and iv) the reference in Article 28(9)(b) to “on the latest of the dates on which the Convention enters into force for those Contracting Jurisdictions”;   with references to “30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the withdrawal or replacement of the reservation with respect to that specific Covered Tax Agreement”;
Article 29 (Notifications), paragraphs (6)(a) and (b)
6. A Party may make additional notifications pursuant to subparagraphs b) through s) of paragraph 1 by means of a notification addressed to the Depositary. These notifications shall take effect: a) with respect to Covered Tax Agreements solely with States or jurisdictions that are Parties to the Convention when the additional notification is received by the Depositary: i) for notifications in respect of provisions relating to taxes withheld at source, where the event giving rise to such taxes occurs on or after 1 January of the year next following the expiration of a period of six calendar months beginning on the date of the communication by the Depositary of the additional notification; and ii) for notifications in respect of all other provisions, for taxes levied with respect to taxable periods beginning on or after 1 January of the year next following the expiration of a period of six calendar months beginning on the date of the communication by the Depositary of the additional notification; and b) with respect to a Covered Tax Agreement for which one or more Contracting Jurisdictions becomes a Party to this Convention after the date of receipt by the Depositary of the additional notification: on the latest of the dates on which the Convention enters into force for those Contracting Jurisdictions.	v) the references in subparagraph a) of paragraph 6 of Article 29 (Notifications) to “on the date of the communication by the Depositary of the additional notification”; and vi) the reference in subparagraph b) of paragraph 6 of Article 29 (Notifications) to “on the latest of the dates on which the Convention enters into force for those Contracting Jurisdictions”; with references to “30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the additional notification with respect to that specific Covered Tax Agreement”;

 

 

 

 

Table E2: Reservations that a contracting jurisdiction may choose to make with respect to the covered tax agreements, pursuant to Articles 35(7)(a)(vii) to 35(7)(a)(x)

Provisions	Provisions Replaceable under Article 35(7)(a)
Article 36 Entry into Effect of Part VI - Arbitration	Article 35(7) (a) A Party may reserve the right to replace:
1. Notwithstanding paragraph 9 of Article 28 (Reservations), paragraph 6 of Article 29 (Notifications), and paragraphs 1 through 6 of Article 35 (Entry into Effect), with respect to two Contracting Jurisdictions to a Covered Tax Agreement, the provisions of Part VI (Arbitration) shall have effect: a) with respect to cases presented to the competent authority of a Contracting Jurisdiction (as described in subparagraph a) of paragraph 1 of Article 19 (Mandatory Binding Arbitration)), on or after the later of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement; and b) with respect to cases presented to the competent authority of a Contracting Jurisdiction prior to the later of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement, on the date when both Contracting Jurisdictions have notified the Depositary that they have reached mutual agreement pursuant to paragraph 10 of Article 19 (Mandatory Binding Arbitration), along with information regarding the date or dates on which such cases shall be considered to have been presented to the competent authority of a Contracting Jurisdiction (as described in subparagraph a) of paragraph 1 of Article 19 (Mandatory Binding Arbitration)) according to the terms of that mutual agreement. 2. A Party may reserve the right for Part VI (Arbitration) to apply to a case presented to the competent authority of a Contracting Jurisdiction prior to the later of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement only to the extent that the competent authorities of both Contracting Jurisdictions agree that it will apply to that specific case.	vii) the references in paragraphs 1 and 2 of Article 36 (Entry into Effect of Part VI) to “the later of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement”; with references to “30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the provisions of this Convention with respect to that specific Covered Tax Agreement”; and
3. In the case of a new Covered Tax Agreement resulting from an extension pursuant to paragraph 5 of Article 29 (Notifications) of the list of agreements notified under clause ii) of subparagraph a) of paragraph 1 of Article 2 (Interpretation of Terms), the references in paragraphs 1 and 2 of this Article to “the later of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement” shall be replaced with references to “the date of the communication by the Depositary of the notification of the extension of the list of agreements”. 4. A withdrawal or replacement of a reservation made under paragraph 4 of Article 26 (Compatibility) pursuant to paragraph 9 of Article 28 (Reservations), or the withdrawal of an objection to a reservation made under paragraph 2 of Article 28 (Reservations) which results in the application of Part VI 47 (Arbitration) between two Contracting Jurisdictions to a Covered Tax Agreement, shall have effect according to subparagraphs a) and b) of paragraph 1 of this Article, except that the references to “the later of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement” shall be replaced with references to “the date of the communication by the Depositary of the notification of withdrawal of the reservation”, “the date of the communication by the Depositary of the notification of replacement of the reservation” or “the date of the communication by the Depositary of the notification of withdrawal of the objection to the reservation”, respectively. 5. An additional notification made pursuant to subparagraph p) of paragraph 1 of Article 29 (Notifications) shall have effect according to subparagraphs a) and b) of paragraph 1, except that the references in paragraphs 1 and 2 of this Article to “the later of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement” shall be replaced with references to “the date of the communication by the Depositary of the additional notification”.	viii) the reference in Article 36(3) (Entry into Effect of Part VI) to “the date of the communication by the Depositary of the notification of the extension of the list of agreements”; ix) the references in Article 36(4) (Entry into Effect of Part VI) to “the date of the communication by the Depositary of the notification of withdrawal of the reservation”, “the date of the communication by the Depositary of the notification of replacement of the reservation” and “the date of the communication by the Depositary of the notification of withdrawal of the objection to the reservation”; and x) the reference in Article 36(5) (Entry into Effect of Part VI) to “the date of the communication by the Depositary of the additional notification”; with references to “30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the provisions of Part VI (Arbitration) with respect to that specific Covered Tax Agreement”.

 

A) Contracting jurisdictions that choose to adopt the reservations under Article 35(7)(a)(i) as at 30th March 2020 include the following:

• [Definitive] Cyprus, Russia, Sweden, Switzerland;
• [Provisional] Andorra, Estonia, Germany, Hong Kong, Italy, Kenya, Romania, Spain

 

B) Article 35(1)(b), as modified by article 35(7)(a), has changed the reference point of entry-into-effect date from "the later of the entry-into-force dates of the CTA" to the date that is "30 days from receipt by the Depositary of the notifications given by the reserving contracting jurisdiction that it has completed the internal procedure for the entry into effect provision with respect to that specific CTA", which is contingent upon the occurrence of a specified event, pursuant to article 35(7)(a). 

 

C) Take Sweden for example.

 

• Sweden has reserved its right to replace article 35(1) with article 35(7)(a)(i). For the synthesized texts of the entry-into-effect provision of the MLI and the Sweden-UK CTA, please see [here]. 

• Up to 30th April 2020, Sweden had not given the notification to the OECD Depositary of the completion of the internal procedure for the entry-into-effect provision of the MLI.  See information from the Depositary. [here] 

 

D) Take the Russian Federation for example.

 

On 30^th April 2020, the Russian Federation gave notification to the OECD Depositary confirming the completion of its internal procedures for the entry-into-effect provision of the Covered Tax Agreements pursuant to Article 35(7)(b) of the MLI. The Russian Federation is the first contracting jurisdiction to give the notification of the reservation made under article 35(7)(a). See the information from the Depositary. [here] 

 

 

Table E3 - Entry into effect dates for selected jurisdictions

Jurisdiction	Signature	Deposit ratification instrument	Entry into Force	Status of List	Alternative Rules		Reservations
					Article	Article	Article	Article
					35(2)	35(3)	35(6)	35(7)(a)
India	6/7/2017	6/25/2019	10/1/2019	Definitive	x
Russian Federation	6/7/2017	6/18/2019	10/1/2019	Definitive		x	x	x
Sweden	6/7/2017	6/22/2018	10/1/2018	Definitive		x		x
United Kingdom	6/7/2017	6/29/2018	10/1/2018	Definitive

 

 

 

 

 

 

 

E) Sub-paragraphs (vii) to (x) of Article 35(7)(a) shall apply to the provisions of Article 36 (Arbitration) using the same language structure as shown above.

 

 

[8] Concluding Comments

 

Article 35 of the MLI contains 2 types of options: opt-out (reservations) provisions under articles 35(6) and (7), and alternative provisions under articles 35(2) and (3). 

 

Article 35(4) contains a special rule under which the taxpayer can present a MAP request for a case that occurs on or after the entry-into-force date. Article 35(6) contains an opt-out provision providing that a contracting jurisdiction may choose not to apply the special rule under Article 35(4) that provides early access to a taxpayer who is eligible for a MAP request under Article 16(1).

 

A contracting jurisdiction is free to apply alternative options to its CTAs for the purpose of the practical administration of domestic tax rules and the entry-into-effect provision of the MLI. Article 35(2) and article (3) are also non-default opt-in provisions.

 

With respect to the application of the entry-into-effect provision, if a contracting jurisdiction adopts an alternative provision either under articles 35(2) or (3) which modifies the application of article 35(1)(a) or (1)(b), while the other contracting jurisdiction does not do so, the entry-into-effect provision of that CTA shall apply asymmetrically. The provision of the alternative provisions under article 35 is an exception to the reciprocity principle under Article 21(1) of the Vienna Convention on the Law of Treaties. Both articles 35(2) and (3) are types of an alternative provision that is a non-default opt-in provision. The choice of alternative options allows for an asymmetrical application of the MLI provision while the choice of an opt-in provision only allows for a symmetrical application, with matching notifications for it to take legal effect. 

 

[End of Entry into Effect Section]

 

See more on Multilateral Instrument - Structures and Contents [read]

 

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