Malta signs Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS

On the 7th of June 2017, Malta has together with other 75 countries, signed or formally expressed their intention to sign the multilateral convention to implement tax treaty related measures to prevent BEPS.

This multi-lateral instrument (MLI) will allow jurisdictions to swiftly transpose the results of the BEPS project into their existing tax treaty network

The measures included in the MLI address hybrid mismatches, treaty abuse, avoidance of permanent establishment, mutual agreement procedures and arbitration. While certain provisions of the MLI establish a number of minimum standards that are required to be implemented by jurisdictions signing up to it, in respect of other articles, the signatories may choose whether, and/or how, to apply options available by way of filing technical reservations and notifications.

The first modifications to tax treaties are expected to enter into force in early 2018.

Malta has indicated 71 tax treaties which it wishes to be covered by the MLI and opted to apply:

  1. The Minimum Standard, which includes provisions dealing with the purpose of a covered tax agreements (article 6 of the MLI), prevention of treaty abuse (article 7 of the MLI) and mutual agreement procedure and corresponding adjustments (articles 16 and 17 of the MLI); 

  2. Provisions of article 9(4) of the MLI in connection with capital gains from alienation of shares or interests of entities deriving their value principally from immovable property; and

  3. Provisions dealing with arbitration procedure subject to certain reservations (articles 18-26 of the MLI).     

For further information please contact the firm’s tax partners Stephen Balzan on [email protected] or Elaine Camilleri on [email protected]

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected].

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