Base Erosion and Profit Shifting (BEPS)

Nathalie Bravo

I. S. 328Introduction

Several measures resulting from the work of the OECD on addressing base erosion and profit shifting (BEPS) require changing the OECD Model Tax Convention on Income and on Capital (OECD Model). As the changes to the OECD Model are not automatically incorporated in the tax treaty network, the OECD estimates that in order to end BEPS, it will be necessary to amend more than 3,000 bilateral tax treaties for the avoidance of double taxation (tax treaties). In order to accomplish this task in a coordinated and timely manner, the OECD concentrates its efforts in Action 15 of the BEPS Action Plan on finding innovative ways to modify tax treaties.

After analysing relevant tax and public international law issues, the OECD concluded in its deliverable report on Action 15 (published on 14 September 2014) that developing a multilateral instrument to update the tax treaty network is desirable and feasible. Until now, multilateral experiences in international tax law have been limited to a few cases, such as (i) the Agreement to Avoid Double Taxation between the Member Countries of the Andean Community of Nations, (ii) the Nordic Multilateral Double Taxation Convention and (iii) the Double Taxation Agreement of the Caribbean Community (CARICOM).