The Union Cabinet in India has given its approval for India’s signing of a multilateral convention to implement tax treaty-related measures to prevent base erosion and profit shifting (BEPS).
Implementation of the BEPS recommendations requires amendments to some 3,000 bilateral income tax treaties. Among the final BEPS recommendations is the multilateral instrument (convention) that is designed to allow for expedited changes to all covered bilateral tax treaties—that is, the multilateral convention provides a process for swiftly making changes to the treaties.
The convention basically would implement two minimum standards relating to the prevention of treaty abuse and dispute resolution through the “mutual agreement procedure.” The convention does not function in the same way as an amending protocol to a single existing treaty (that directly amends the text of the covered tax agreement). Instead, the multilateral convention is to be applied alongside existing tax treaties, modifying their application in order to implement BEPS measures.
India’s cabinet, in addition to giving its approval to the signing of the multilateral convention, has proposed to provide a list of bilateral income tax treaties that would be amended by the multilateral convention.
Read a May 2017 report [PDF 311 KB] prepared by the KPMG member firm in India
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