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Switzerland Consults On Adoption Of BEPS Tax Treaty Changes

by Ulrika Lomas,, Brussels

26 December 2017

On December 20, 2017, the Swiss Federal Council launched a consultation on the country's adoption of the multilateral instrument (MLI) to implement tax-treaty-related measures to prevent base erosion and profit shifting.

The MLI was developed by the OECD under Action 15 of the BEPS project. Countries who have decided to adopt it will transpose BEPS recommendations into their tax treaties. The Convention will strengthen provisions to resolve treaty disputes to reduce double taxation and increase tax certainty for businesses. The Instrument allows countries considerable flexibility in deciding which pacts should be amended and to what extent. The OECD is developing tools to enable taxpayers to better understand the extent of the changes being incorporated into existing treaty texts.

While the instrument is intended to dramatically simplify amending the numerous agreements already in existence, the BEPS minimum standards can also be agreed through bilateral amendments to double tax agreements (DTAs). Switzerland and the United Kingdom are to adapt their existing double tax agreement to the BEPS minimum standards by means of a bilateral protocol of amendment, which they signed on November 30, 2017. The consultation covers also these agreed changes.

Explaining the changes, the Government said: "Switzerland intends to make provision for supplementing the preamble of DTAs in terms of purpose, including an agreement abuse clause in DTAs, and adjusting the dispute settlement provisions within the framework of memoranda of understanding. In keeping with its DTA policy, Switzerland additionally advocates including the arbitration clause provided for in the BEPS convention."

TAGS: tax | business | United Kingdom | agreements | transfer pricing | Switzerland | standards | Africa | BEPS

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