How Can the Multilateral Tax Treaty Help Overcoming the Treaty Shopping Issue

Abstract

One of the currently main challenges of International Tax Law is addressing the treaty abuse deployed by various multinationals. These, by taking advantage of their freedom of movement and establishment, have the chance to refine and enlighten their tax burdens by involving third countries and their tax relationship, therefore gaining arguable and controversial profits.This phenomenon has steadily grown, reaching nowadays the extent where many countries around the world are concerned given the fewer tax revenues. Amongst the most infamous business, newspapers reported Apple, Google, Ikea, Pepsi, Amazon and P&G, whose strategies proved being effective.What is now left to the countries is finding a strategy to curb abuses of law. At this regard, seen the inefficiency of Bilateral Tax Treaties, various legal devices were tested along the years but none of them led to a proper solution. Moreover, constraints arising from European Law may look like inflicting the coup de grace on the residual hope.Although it would look consequent that Tax Law cannot offer a proper antidote, the countermeasure planned by the OECD may finally help resolving these issues: a Multilateral Tax Treaty.With it, it would be possible to involve several countries in a single lawsuit, thus facilitating exchange of information and sharing of opinions.Yet, a Multilateral Treaty in this field, although wished for since almost two decades, still needs a proper tailoring to the current panorama with the right legal measures and this is why an International Conference was announced for 2015.Therefore, what is a Multilateral Tax Treaty and can it face this challenge? How should it be drafted and which provisions should it contain? Are there alternatives to it?With this thesis, I will try to provide an answer to these questions above and explaining how a possible failure could lead to an utterly grim scenario. Moreover, based on both current knowledge and personal prompts, I will try to hypothesise which provisions should this contain, by taking into account past successes and failures of similar treaties and legal principles of International law.