Cyprus to sign OECD Multilateral Instrument setting minimum standards on Double Tax Treaties

Cyprus announced its intention to sign the ‘Multilateral Convention to Implement Tax Treaty related measures to Prevent Base Erosion and Profit Shifting’ (Multilateral Instrument) of the OECD.

According to a press release issued by the Finance Ministry, the signing of the “Multilateral Instrument” has been approved by the Council of Ministers on April 5. The signing is scheduled to take place in Paris on June 7.

The ratification of the Multilateral Agreement will pave the way for updating all existing Double Tax Agreements by incorporating the two minimum standards of Action 6 (Treaty Abuse) and the minimum standard of Action 14 (Making Dispute Resolution Mechanisms More Effective) of BEPS project in the context of safeguarding and orderly application of the existing Double Tax Agreements, the Ministry said.

The Multilateral Instrument as well the Explanatory Statement, which regulates and establish among others provisions the minimum standards for both existing and for the new Double Tax Treaties, was prepared by the OECD Ad-hoc Committee comprising more than 100 tax jurisdiction including the Republic of Cyprus.

The Ad-hoc Committee was established in accordance with Action 15 ‘Develop a Multilateral Instrument’ one of the 15 actions of the Base Erosion and Profit Shifting project (BEPS) which issued the OECD / G20 in October 2015. Action 15 of the BEPS project analysed the possibility of developing a multilateral instrument in order to allow countries to swiftly amend their tax treaties to implement the tax treaty-related BEPS recommendations.

Source: Cyprus News Agency