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Global Changes in Double Taxation Treaties - Possible Impact on Your Business

On November 24, 2016, the OECD published the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). The MLI is intended to transpose results from the OECD actions against tax fraud into existing double tax treaties.

It will implement minimum standards to counter tax treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty (DTT) policies. The Ministry of Finance asked AmCham and its members for comments/opinions on the issue while it is formulating the position of the Slovak Republic.

Minimum standard implementation of MLI would mean addressing the following two articles: Article 6 - Tax Treaty Abuse and Article 14 - Dispute Resolution Mechanism. The minimum standard for access to Mutual Agreement Procedure (MAP) should help businesses resolve cross-border disputes more timely and efficiently. Businesses may welcome the optional mandatory arbitration standard. In countries that adopt this standard, there could be a more certain route to resolving the most difficult disputes.

Therefore, please use the opportunity and share with us any issues that may impact your business as a result of MLI, mainly in area of DTT abuse and dispute resolution mechanism. We are also looking for suggestions on improving situation arising from current tax treaties, as these may be modified via MLI.

The MLI’s multitude of flexibilities will make its application highly complex. In some cases, a country can chose to selectively apply an option of the condition that its treaty partner have made the same option. In other cases, the application of some rules will be asymmetrical. One treaty partner could apply one rule while the other treaty partner can apply a different rule. A signatory can apply an option to selective treaties by identifying the treaties to which the option would apply. Each option requires the signatory to provide a detailed notification to the Depository (the General Secretary of the OECD) identifying which provisions in each of that country’s DTT is impacted by the option.
For more details please open the MLI summary from the OECD website.

We kindly ask you to share with us your comments/suggestions by Thursday, February 9 by 12:00PM at michal.krcmery@amcham.sk

Download the "multilateral-instrument-BEPS-tax-treaty-information-brochure"
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