Multilateral Instrument. Laura Gheorghiu, Nadia Rusak

Transcription

1 Multilateral Instrument Laura Gheorghiu, Nadia Rusak 2017

2 Agenda History and policy objectives of the MLI MLI mechanics MLI content Concluding remarks 2

3 HISTORY AND POLICY OBJECTIVES OF THE MLI 3

4 BEPS BEPS Project concerted effort by G20 and OECD countries to address international tax arbitrage and international double nontaxation of MNE Started in February 2013 First Action Plan released in July 2013 Final Report issued in October 2015 Areas covered: digital economy, hybrid mismatch arrangements, CFC rules, interest deductibility, harmful tax competition, treaty abuse, artificial avoidance of PE status, transfer pricing principles and documentation, mandatory disclosure, dispute resolution. 4

5 BEPS FINAL REPORT RECOMMENDATIONS Minimum Standards Commitment to implement. Combating treaty shopping; implementing country-bycountry (CbC) reporting; fighting harmful tax practices; and improving dispute resolution. Common Approaches Agreement on general policy direction. Hybrid mismatch arrangements and interest deductibility. Best Practices Proposed when negotiators fail to reach consensus. Mandatory disclosure and CFC legislation. Reinforcing Existing International Standards Addressing loopholes in current international standards (e.g. OECD Model Convention). Revision of existing standards relating to tax treaties and transfer pricing. 5

6 MLI Action 15 of BEPS - Proposal to create a single instrument that addresses treaty-related BEPS measures Objectives: Enforce the minimum standards and provide guidance on common approaches/best practices ( optional standards ) Achieve a degree of convergence of international tax regimes without the need to renegotiate bi-lateral tax treaties 6

7 MLI Is neither a treaty amending protocol nor a multilateral treaty Applies alongside existing treaties and modifies their application in order to streamline the implementation of treaty-related BEPS measures Options as to how to implement minimum standards Flexibility in relation to provisions that do not reflect minimum standards No obligation for countries to sign MLI or opt-in to all measures If there is significant buy-in, could have important consequences on the current tax treaty system 7

8 MLI Timeline October 5, 2015 Final BEPS Report Released (MLI is Action 15) July 2016 OECD request for input on the multilateral instrument November 24, 2016 Text of MLI adopted December 31, 2016 MLI open for signing June 2017 High-level signing ceremony / countries will sign and begin ratification process 8

9 MECHANICS 9

10 Signature and Ratification Process Entry into force of the MLI in a country (earliest in 2018): Five countries must sign and complete domestic legal requirements for ratification Each must advise which provisions of its CTAs are affected by the change, or express a reservation on the change (i.e., choosing not to adopt it vis-à-vis that CTA) Each must give notice to depositary once ratification is completed MLI enters into force for the five countries three calendar months after the last notice is given Entry into effect as between two signatories as follows: N/R WHT on first day of calendar year following entering into force in both countries All other taxes for taxable periods beginning six months after entering into force in both countries Same delays for subsequent signatories 10

11 Example June 2017 Countries A, B, C, D and Canada to sign the MLI August 2018 Upon completion of ratification process, the latest of 5 countries i.e. Canada, notifies the depositary (OECD) November 2018 MLI to enter into force for countries A, B, C, D and Canada (3 months after notice of ratification) January 1, 2020 OTHER TAXES (for tax period that starts 6 months after) MLI between country A and Canada to enter into effect January 1, 2019 WTH (1 st day of next calendar year) 11

12 Modifies Specific Article in a Treaty Where: Both Canada and the other country are signatories and MLI is in effect vis-à-vis the treaty Both Canada and other country have identified treaty as a Covered Tax Agreement (CTA) Neither country has opted out (reserved) of application of specific article in relation to CTA Minimum standards must apply but opt out possible to extent CTA already includes a similar provision (e.g. Canada-US Treaty LOB rules) Asymmetrical application of certain provisions Compatibility clauses describe how existing provisions in CTA are superseded by MLI or how new sections are inserted Can withdraw reservations over time 12

13 MLI CONTENT 13

14 MLI Article BEPS Action Goal of BEPS Actions 3 to 5 2 Neutralize the effects of hybrid mismatch arrangements (optional standard) 6 to 11 6 Prevent the granting of treaty benefits in inappropriate circumstances (minimum standard) 12 to 15 7 Prevent the artificial avoidance of PE status (optional standard) 16 to Set out ways to make dispute resolution mechanism more effective (minimum standard) 14

15 Hybrid Mismatch Arrangements (ACTION 2) 15

16 Hybrid Mismatch Arrangements Article 3 MLI: Fiscally transparent entities Article 4 MLI: Dual resident entities Article 5 MLI: Application of methods for elimination of double taxation 16

17 Fiscally transparent entities Fiscally transparent entities entities treated by one or both states as flow-through, i.e. income is taxable in hands of the entity participants and not of the entity itself (e.g. partnership, ULC, LLC, trust) Such entities are used by MNE to generate double non-taxation or excessive double taxation relief (e.g., deduction/non-inclusion, multiple deductions, multiple FTC) 17

18 Example Hybrid Entity Country II Country I A B NI Royalty payment D Double Deduction Country II Country I A B D Interest payment Interest payment D C C 18

19 Article 3 MLI Income derived by/through a fiscally transparent entity is treated as income of a resident of a state only if it is treated as income of a resident of that state for domestic tax purposes Clarification that a jurisdiction does not have to grant exemption, deduction or credit for taxes paid in the other jurisdiction if the other jurisdiction has the right to tax solely because income is also income derived by its resident Optional provision countries may opt-out of the whole or part of Article 3 or identify specific scenarios to which the article may apply 19

20 Dual resident entities Treaties apply to resident of a state per domestic laws Contain dual-resident tie-breaker rules Key tie-breaker rule for persons other than individuals : place of effective management (PEM) (e.g. art. 4(3) OECD Model Convention) Thus, an entity can shift tax residence to a low-tax jurisdiction by relocating PEM 20

21 Article 4 MLI Competent authority tie-breaker -- expands criteria for determining dual-resident entity s treaty residence to include other factors in addition to PEM (e.g. place of incorporation or constitution, and similar criteria) Competent authorities need to reach agreement on residence, otherwise entity not entitled to treaty benefits 21

22 Elimination of double taxation Treaties include an exemption method that allows the residence jurisdiction to exempt prescribed foreign income from taxation This may result in double non-taxation if income is not taxed in the source jurisdiction 22

23 Article 5 MLI Options To Deal With The Exemption Method In Treaties Option A (switchover clause) No exem pti onin Country A wher e Country Ba ppli es t he trea ty to exem pt or reduce ra te of ta x. Country Asha ll off er a f or ei gn tax credit on the basis of net income. Option B No exem pti on i n Country A f or di vi dends t ha t a re ta x deducti bl e incountry B. Country A sha ll off er a f or ei gn ta x credit on the basis of net income. Option C If income is taxed under the treaty in Country B, Country A shall offer a foreign tax credit on the basis of net income. If income is exempt from tax in Country A, Country A may still give a foreign tax credit for taxes paid in Country B. 23

24 Example A NI Exempted dividend Country II Country I Hybrid instrument B D Tax-deductible interest 24

25 Article 5 MLI Optional standard Asymmetrical application is possible (e.g. one jurisdiction chooses Option A and the other Option B). Can reserve the right with respect of the entire Article 5 not to apply to CTAs If not choosing Option C, can prevent the other jurisdiction from applying Option C 25

26 Preventing Treaty Abuse (Action 6) 26

27 Minimum Standards for Preventing Treaty Abuse Article 6 Article 7 Purpose of a CTA Prevention of treaty abuse Optional Standards for Preventing Treaty Abuse Article 8 Article 9 Article 10 Article 11 Dividend transfer transactions Ca pi ta l gai ns from a li ena ti on of sha res or i nt er est s of enti ti es deriving their value principally from immovable property Anti-abuse rule for PEs located in third jurisdictions Application of agreements to restrict a party s right to tax its own residents ( saving clause ) 27

28 -Treaty integrity rules e.g. beneficial ownership etc. (can still abuse the rule) Art. 6 MLI: Purpose of a CTA Include in preamble : purpose of tax treaty is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through avoidance and evasion (including treaty-shopping arrangements aimed at obtaining... [treaty benefits for] residents of third jurisdictions) Minimum standard but option not to include where CTAs already contain similar preamble language Tax treaties interpreted in their context and in light of their object and purpose preamble will guide interpretation 28

29 Art. 7 MLI: Anti-Treaty Abuse Standards Anti-avoidance rules to prevent benefits being used in unintended circumstances (treaty-shopping and other abusive arrangements) One of three provisions to curb treaty abuse Principal Purpose Test (PPT) PPT + Simplified LOB Detailed LOB supplemented by an anti-conduit rule Default option is Principal Purpose Test (PPT) (minimum standard) Limitation on benefits (LOB) is a supplemental and optional rule Based on conclusions of Finance s domestic anti-treaty shopping consultation, Canada expected to adopt PPT 29

30 Art. 7(1) MLI: PPT Denies treaty benefits when obtaining benefit is one of the principal purposes of the arrangement, unless granting the benefit would be in accordance with purpose of provision General anti-abuse rule (like GAAR) Default provision / minimum standard Interpretive difficulties (what is a principal purpose, what is the object/purpose of a treaty provision) Appeal to competent authority 30

31 Example Canada-UK Treaty Art. 10(8) Dividend, 11(9) Interest, 12(8) Royalty: The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of [shares/ debt/ rights]... to take advantage of this Article by means of that creation or assignment If Canada and UK sign MLI and do not reserve, Art. 7(1) will replace existing language 31

32 Example A 22-month construction contract is split into two 11-month contracts between the customer, the contractor and a corporation related to the contractor. Under the agreement with the customer, the contractor and the related party are jointly liable for the work Reasonable to conclude that: one of the principal purposes of the separate contract with the party related to the contractor is to avoid the construction PE Granting the benefit of the treaty would be contrary to the object and purpose of the construction PE 32

33 Art. 7(8)-(13) MLI: Simplified LOB + PPT Simplified LOB limits availability of treaty benefits to persons that meet objective qualified person test (genuine connection with state) Qualified person : individual, government, publicly trade corporation (recognized stock exchanges), 50% controlled by qualified persons, active conduct of a business Appeal to competent authority Can apply: to both states, if both elect into it to neither state, if one state elects into simplified LOB + PPT and the other elected PPT only unilaterally only, if only one state elects into simplified LOB + PPT and the other elects PPT only but accepts the application of simplified LOB to the first state 33

34 Art. 7(8)-(13) MLI: Simplified LOB + PPT Interaction between the Simplified LOB and PPT First apply the Simplified LOB to test the person: to deny treaty benefits to persons without sufficient nexus to a contracting jurisdiction based on objective criteria (if doesn t qualify, out of the treaty) Second apply PPT to test the transaction: to determine whether the arrangement or transaction meets the PPT (i.e. if abusive, arrangement/transaction will not receive treaty benefits) Concerns with respect to how a PPT or LOB rule will apply to various collective investment vehicles (e.g. private equity funds) OECD Discussion draft: Treaty entitlement of non-civ funds (Mar 2016) OECD Discussion draft: Treaty residence of pension funds (Feb 2016) 34

35 Art. 7(15) MLI: Detailed LOB + anti-conduit Opt-out to allow parties (e.g. US) to negotiate a bilateral agreement for a detailed LOB Plus either a PPT or a specific anti-conduit mechanism Specific anti-conduit mechanism for financing arrangements may be present in domestic law (e.g. B2B rules) Canada-US is only Canadian treaty with a detailed LOB rule 35

36 Art. 8 MLI: Dividend transfer transactions Optional standard Introduces a minimum 365-day shareholding period for a company to be entitled to an exemption or reduced rate of dividend WHT from subsidiary Other elements of CTA (i.e. ownership thresholds, taxes rates and form of ownership) are not modified Can opt-out of Art. 8 entirely or only in respect of certain CTAs that already contain a minimum holding period 36

37 Example Canada-Netherlands Tax Treaty, art. 10(2)(a): dividends may also be taxed in the State of which the company paying the dividends is a resident but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 5% of the gross amount of the dividends if the beneficial owner is a company that owns at least 25% of the capital of, or that controls directly and indirectly at least 10% of the voting power in, the company paying the dividends No current holding period Article 8 MLI would require that the 25%/10% ownership thresholds be met for at least 365-day period preceding the dividend 37

38 Art. 9 MLI: Capital gains on shares or interests in real estate holding entities Optional standard Anti-dilution provision for real estate holding entities Introduces a minimum 365-day period for the relevant value threshold of real estate and expands the rule from shares to interests in partnerships and trusts Can opt-out of all or portion of the provision Can opt-out of the entire article in favour of an existing language in art. 13(1) of the OECD Model Treaty which applies where >50% of the value of shares or comparable interests be derived from immovable property during the 365 days preceding the sale 38

39 Example Canada-Barbados Tax Treaty, art. 14(3): Gains from the alienation of shares of a company, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State. Gains from the alienation of an interest in a partnership or a trust, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State No current period for maintaining the value threshold Article 9(1) MLI would require that shares/interests derive their value principally from immovable property during the 365-day period preceding the sale Can opt out with respect to partnerships/trusts because already covered by the treaty 39

40 Art. 10 MLI: PE located in third jurisdictions Optional standard Triangulation provision for low-tax branches exempt from tax in the head-office state No treaty benefits are available if income received from one state is treated by the other state ( head office state ) as attributable to PE in the third state and the tax in the third state is less than 60% of tax that would otherwise be payable in the head office state Exception for active trade or business PE Discretionary relief by competent authorities 40

41 Example Country A Country B A B Royalty/ Interest Treaty-reduced WHT Country C (low-tax) PE 41

42 Art. 11 MLI: Saving clause Optional standard Preserves the right of a state to tax its own residents, except with respect to certain treaty provisions that expressly allocate the taxing right to the source state (e.g. business profits of PE, gains from real property, government service, students/teachers, credit and exemption methods, MAP, pensions etc.) Typical in U.S. treaties 42

43 Art. 11 MLI: Saving clause E.g. Canada-US Tax Treaty Art. XXIX (2) Except as provided in paragraph 3, nothing in the Convention shall be construed as preventing a Contracting State from taxing its residents and, in the case of the United States, its citizens and companies electing to be treated as domestic corporations, as if there were no convention between the United States and Canada with respect to taxes on income and on capital 43

44 Artificial Avoidance of PE Status (action 7) 44

45 Action 7: Expanding the PE Definition Where PE status is circumvented through: a. Article 12 and 15 MLI: agency arrangements b. Article 13 MLI: specific activities exemption (preparatory and auxiliary) c. Article 14 MLI: fragmentation of activities (e.g., splitting up contracts) Not minimum standard - each party chooses measures to adopt Applies to CTA if both Parties adopt Possible for Parties to adopt only fragmentation of activities rule Profit attribution rules also to be clarified 45

46 Current Dependent Agent PE Definition 1. the agent has, and habitually exercises, the authority to conclude contracts in the name (on behalf) of the non-resident in Canada contracts relating to the business proper of the enterprise 2. the agent is not an independent agent acting in the ordinary course of his business 3. the agent does not engage solely in activities of a preparatory or auxiliary character (e.g. purchase of goods, advertising) See para. 49 of Knights of Columbus v. R. (2008 TCC 307) 46

47 Current Dependent Agent PE Definition Treaty Dependent Agent PE Independent Agent Exception Auxiliary Services Exception OECD Model Ar. 5(5) Art. 5(6) Art. 5(4) Canada US Art. 5(5) Art. 5(7) Art. 5(6) Canada UK Art. 5(4) Art. 5(5) Art. 5(4) only purchase of goods Canada France Art. 5(5) Art. 5(6) Art. 5(4) 47

48 Example 1 - Commissionnaire Arrangement From BEPS Final Project Action 7 p. 15 XCO and YCO are members of the same multinational group. XCO is resident of US and sells medical products. Until 20XX, these products are sold in Canada by YCO, a resident of Canada. In 20XX, the status of YCO is changed to that of commissionnaire. YCO transfers to XCO its fixed assets, its stock and its customer base and agrees to sell in Canada the products of XCO in its own name, but for the account of and at the risk of XCO. Since YCO does not own the products that it sells, it cannot be taxed on the profits derived from such sales and is therefore only taxed on the remuneration that it receives for its services (usually a commission). 48

49 Other Examples Agency Arrangements Example 2: YCO substantially negotiates contracts in Canada but contracts are for formally concluded in the US because they are finalised/signed or authorised in the US Example 3: YCO habitually exercises the authority to conclude contracts on behalf of XCO but is an independent agent even though it is closely related to XCO 49

50 Dependent Agent PE Current Dependent Agent The agent [1] has, and habitually exercises, authority to conclude contracts [2] in the name (on behalf) of the non-resident in Canada 50

51 Dependent Agent PE (cont d) Art. 12(1) MLI Dependent Agent [1i] habitually concludes contracts, our [1ii] habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise, AND contracts are: [2i] a) in the name of the enterprise; or [2ii] b) for the transfer of the ownership of, or for the granting of the right to use, property owned by that enterprise or that the enterprise has the right to use; or [2iii] c) for the provision of services by that enterprise 51

52 Dependent Agent PE (cont d) OECD Model Commentary Article 5 para. 32.5: concludes contracts = a contract is considered concluded under the relevant law governing contracts plays the principal role leading to the conclusion of contracts = a contract is concluded as a direct result of that person s actions acts as the sales force of the enterprise/ convinces the third party to enter into a contract with the enterprise E.g. YES: solicits and receives (but does not formally finalise) orders which are sent directly to a warehouse from which goods belonging to the enterprise are delivered and where the enterprise routinely approves these transactions. E.g. NO: only promotes and markets goods or services of an enterprise (e.g. pharma representatives actively promotes company s drugs by encouraging doctors to prescribe these drugs) E.g. NO: acts as distributor (because owns the property it is selling) 52

53 Independent Agent Exception Current Independent Agent Exception The agent is an independent agent acting in the ordinary course of its business (as agent). legally and economically independent from the principal Not subject to detailed instructions or to comprehensive control Bears the entrepreneurial risk 53

54 Independent Agent Exception (cont d) Art. 12(2) MLI Independent Agent Exception Paragraph 1 shall not apply where the person carries on business as an independent agent and acts for the enterprise in the ordinary course of that business. Where, however, a [1] person acts exclusively or almost exclusively on behalf of one or more enterprises [2] to which it is closely related, that person shall not be considered to be an independent agent OECD Model Commentary Article 5 para exclusively or almost exclusively means 90% or more 54

55 Definition Closely Related (Art. 15 MLI) [De facto control by one or by a third person]: based on all the relevant facts and circumstances, one has control of the other or both are under the control of the same persons/enterprises. [De jure control by one of the other]: one possesses directly or indirectly more than 50 per cent of the beneficial interest in the other (or, more than 50% of the aggregate vote and value of the company s shares or of the beneficial equity interest), or [De jure control of both by a third person]: if another person possesses directly or indirectly more than 50 per cent of the beneficial interest (or more than 50 per cent of the aggregate vote and value of the company s shares or of the beneficial equity interest) in the person and the enterprise 55

56 Specific Activity Exemption Specific activities are excluded from PE definition (both fixed place of business PE and dependent agent PE) even if not of a preparatory or auxiliary nature use of facilities to store, display or deliver goods of the non-resident maintenance of stock of goods for purposes of processing by another enterprise or for storage, display or delivery maintenance of a fixed place of business solely for purchasing goods or collecting information Maintenance of a fixed place of business solely for an activity of a preparatory or auxiliary character E.g. e-commerce warehouse structure: N/R stores goods in owns in Canadian warehouse. Goods are sold online and orders fulfilled from the warehouse. Warehouse management and delivery is through own employees. 56

57 Specific Activity Exemption (cont d) OECD Model Commentary Article 5 para. 32.3: Fixed place of business solely for the purposes of preparatory or auxiliary activities is deemed not to constitute a PE a person whose activities are restricted to such purposes should not create a PE either E.g., where a person acts solely as a buying agent for an enterprise and, in doing so, habitually concludes purchase contracts in the name of that enterprise, even if that person is not independent of the enterprise 57

58 Specific Activity Exemption (cont d) Art. 13(2) MLI: all specific activity exemptions are contingent on the activity being of a preparatory or auxiliary character prior language only applied to fixed place of business exemptions Art. 13(3) MLI: Option not to include (position that activities are by their nature strictly preparatory/auxiliary) and to adopt antifragmentation rule instead 58

59 Fragmentation of activities Art. 13(4) MLI: Fragmentation of complementary functions that are part of a cohesive business operation: same enterprise or a closely related enterprise has a PE at that location or another in Canada OR combined activities of two enterprises are not of a preparatory or auxiliary character 59

60 Specific Activity Exemption (cont d) Final Report Action 7 Proposed Changes to Commentary para Preparatory character : carried on in contemplation of the carrying on of essential/significant part of the enterprise s activity (e.g. training employees) Auxiliary character : carried on to support without being part of essential/significant part of activity (does not use significant resources) Look at core function of the business Warehouse e.g. (para. 22 and 22.3): if sells online and fulfills from own warehouse (or one over which has control) exception does not apply since warehouse represents important asset and use of employees and is an essential part of sale/distribution business 60

61 Splitting up of contracts Construction site PE/ Exploitation of Natural Resources PE: to determine whether the 12-month period has been exceeded PPT could apply or Art. 14 MLI: aggregate connected activities of closely related enterprises at the same site during different periods (each exceeding 30 days) 61

62 Profit Attribution Attribution of profits: per Article 7(2) of Model Convention E.g. Agency PE results in the rights and obligations resulting from the contracts being allocated to the agency PE not all profits from the performance of the contracts will be attributed only those that the PE would have derived if it were a separate and independent enterprise performing the activities and dealing at arm s length with the head office and others in the corporate group Consider functions performed, assets used and risks assumed by PE activities performed by other enterprises and by the rest of the enterprise to which the PE belongs must be properly remunerated Head office State must eliminate double taxation on profits attributed to PE (Art. 23A or B of Model Treaty) BEPS Action 8-10 : Revised Guidance of Profit Slips second revised discussion draft expected June 2017 (transactional profit split method) 62

63 Dispute Resolution Mechanisms (Action 14) 63

64 Minimum Standards for DISPUTE RESOLUTION Article 16 Mutual Agreement Procedure (MAP) Optional Standards for DISPUTE Resolution Article 17 Article Corresponding Adjustments Arbitration 64

65 Art. 16 MLI: Mutual Agreement Procedure Where a person considers that actions of one or both states result in taxation not in accordance with the treaty, the person may present the case to competent authorities of either state within 3 years from the notification of the action Competent authorities shall work to resolve the case by mutual agreement Any agreement shall be implemented regardless any time limits in the domestic laws Can opt-out of MAP if there is an existing MAP clause in the treaties Can opt-out if the existing time period for presenting the case is at least 3 years 65

66 Art. 17 MLI: Corresponding Adjustments Best practice Allows unilateral adjustment to tax in transfer pricing disputes Where States A and B both tax profits of an MNE, and such profits would have accrued to the enterprise in State A had the conditions made between two enterprises were those of independent parties, then State B shall make a corresponding adjustment to tax charged on those profits Can opt-out if there is an existing clause in the treaties or if a state agrees to make an adjustment in the absence of the clause or its competent authority commits to resolve the case on the basis of MAP Can opt-out if a similar clause will be added through bi-lateral negotiations 66

67 Art MLI: Arbitration Option for mandatory binding arbitration Applies if competent authorities fail to reach an agreement pursuant to MAP within 2 years However, can be submitted earlier than 2 years if competent authorities agree Launched by the person that requested MAP Decision is binding with certain exceptions Decision is implemented through mutual agreement Detailed rules on appointment of arbitrators and arbitration process Arbitration clause only applies if both parties opt-in; however, can formulate reservations to limit the scope of eligible cases 67

68 CONCLUDING REMARKS 68

69 Interpretation Only 2 official languages (English and French) No requirement for consolidated texts Basis of interpretation of MLI provisions are: General treaty interpretation rules: provisions of treaty interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty, in their context and in light of the treaty s object and purpose Reliance on BEPS Final Report and OECD Model Tax Convention Commentary MLI Commentary only assists with operation of MLI to modify CTAs Impact of modifications determined between parties based on MAP provisions in CTA (MLI Art. 32) MLI Art. 30: subsequent modifications to CTA agreed to between the Parties MLI Art 37: ability to withdraw 69

70 Current Status 2017 February OECD speed dating meeting to allow countries to discuss implementation of MLI to bi-lateral treaties OECD expects countries to sign on June 7, 2017 Canada will sign and may be in force as early as 2018/2019 US not excepted to sign (no treaties with tax heavens, has strong LOB) EU: mandatory and binding arbitration directive (may lead them to adopt MLI) UK: will sign the MLI in June. Will introduce the PPT to implement minimal standard. Will not adopt the PE changes except for the anti-fragmentation rule because it is a HQ country. 70