General Aspects of the Multilateral Instrument

Abstract

The Multilateral Instrument (MLI) can be regarded as the most innovative and far-reaching development in the area in the area of tax treaties in recent decades. The implementation of the tax treaty related Base Erosions and Profit Shifting (BEPS) measures through the MLI will have major consequences for the global network of bilateral tax treaties. The actual impact of the MLI on tax treaties depends to a large extent on the choices and reservations made by each participating state, especially with regard to provisions that do not reflect BEPS minimum standards. These positions will also influence the impact of the MLI for each state’s participating treaty partners. This article examines certain general and procedural aspects of the MLI, including the scope and interpretation of the MLI. This is followed by a discussion of the operation and legal consequences of the compatibility clauses, the reservations and the notification obligations. The focus is then shifted to various procedural aspects related to the final provisions of the MLI, including the entry into effect and timing aspects.