Russia Joins BEPS MLI To Limit Tax Avoidance Scams

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Brings Russia Into Global Tax Standards Compliance

Russia has joined the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), the OECD announced on June 18th. Russia becomes the 88th jurisdiction to join the pact, which is designed to reduce opportunities for multinational firm profit shifting and improve cross-border tax dispute resolution. The MLI will enter into force for Russia on October 1st this year.

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The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (sometimes abbreviated to BEPS MLA), is a multilateral convention of the Organisation for Economic Co-operation and Development (OECD) to combat tax avoidance by Multinational businesses through the prevention of Base Erosion and Profit Shifting (BEPS). The MLI modifies the application of thousands of bilateral tax treaties concluded to eliminate double taxation. It also implements agreed minimum standards to counter treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty policies.

The BEPS multilateral instrument was negotiated within the framework of the OECD G20 BEPS project and enables countries and jurisdictions to modify their bilateral tax treaties to implement some of the measures agreed.

As at July 2018, 83 jurisdictions had signed the BEPS multilateral instrument, covering more than 1,400 bilateral tax treaties. It originally entered into force on 1 July 2018. The MLI requires businesses to look at bilateral treaties through a new lens, with the need to evaluate the implications to allow sufficient time to adapt tax strategies and operations.

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