On 7 June 2017, Argentina signed the Multilateral Convention for the Implementation of Measures to Prevent Base Erosion and Profit Shifting (the Convention) during a ceremony hosted by the Organization for the Economic Cooperation and Development (OECD) in Paris.
The Convention was signed by 67 countries1, but other eight jurisdictions have expressed their interest on signing it in the near future. The purpose of the Convention is to amend the Double Taxation Treaties (DTT) already signed by the signatories, in order to comply with the minimum standards set by the Base Erosion and Project Shifting Project (BEPS).
The Convention represents a change of paradigm with respect to past treaties, because it allows the amendment of existing DTT without the need to initiate bilateral negotiations with the counterparties, implementing in an almost immediate way the BEPS guidelines on the Argentine treaty network.
Scope of the Convention
The Convention is not limited to the minimum standards set by BEPS, and also contains provisions of general reach. However, the implementation of the BEPS minimum standards is mandatory for the signatory countries, although the Convention frees the parties to implement the provisions of general reach and add other provisions that may be considered relevant.
By way of example, the Convention covers the following BEPS Action Plans: 2 (Hybrids), 6 (Treaty Abuse), 7 (Permanent Establishment) and 14 (Dispute Resolution).
Upon the execution of the Convention, parties will report the list of DTT that will be modified by the Convention, along with the pertinent reserves and notices.
Entry into Force
The entry into force of the Convention shall be subject to the performance by five signatories of the deposit of their instruments of ratification, acceptance or approval.
Andorra, Argentina, Armenia, Australia, Austria, Belgium, Bulgaria, Burkina Faso, Canada, Chile, China, Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Fiji, Finland, France, Gabon, Georgia, Germany, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Korea, Kuwait, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Monaco, Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Romania, Russia, San Marino, Senegal, Serbia, Seychelles, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Turkey, United Kingdom and Uruguay.