The Organisation for Economic Cooperation and Development (OECD) on 31 May 2016, released a discussion draft on BEPS Action 15: “Development of a multilateral instrument to implement the tax treaty-related BEPS measures.” The discussion draft requests comments on technical issues related to the development of the multilateral instrument, which is anticipated to be finalized and open for signature by 31 December 2016.
In the discussion draft, the OECD: (1) summarizes the provisions that are expected to be included in the multilateral instrument; and (2) describes and requests comments on technical issues arising from its development, including issues to be considered in the context of the optional provision on mandatory arbitration.
Action 2: Neutralizing the effects of hybrid mismatch arrangements
Action 6: Preventing the granting of treaty benefits in inappropriate circumstances
Action 7: Preventing the artificial avoidance of PE status
Action 14: Making dispute resolution mechanisms more effective
In a 15 February 2016 letter, the United States Council for International Business (USCIB) expressed its support for the adoption of mandatory binding arbitration to Robert Stack, Deputy Assistant Secretary for International Affairs, U.S. Treasury Department, with a preference for a “short form” or “last best offer” format, indicating that this format reduces the length of time to decision, thereby minimizing uncertainty and cost of arbitration while at the same time protecting and encouraging business investment.
The list of provisions to be included in the multilateral instrument is similar to the list that was provided in the final report on BEPS Action 15 in October 2015.
The discussion draft makes clear that the OECD only seeks comments on technical issues regarding the development of the multilateral instrument and provides examples, including:
The types of technical issues identified in the discussion draft are fundamental issues that likely were identified previously and about which substantial discussions probably have taken place.
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