OECD Arbitration in Tax Treaty Law

1. S. 232Introduction

1.1. Aim and Structure of the Chapter

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”) was recently ratified by the legal number of States needed to make it enter into force. Among its measures, Part VI – which applies upon election of the signing parties – provides for mandatory and binding arbitration. In this respect, the States have been allowed to make several reservations in order to grant them the ‘flexibility’ that was deemed necessary to ensure the adoption of the arbitration provisions by the largest possible number of Jurisdictions.

The purpose of this chapter is, therefore, to analyse the various alternatives provided under Part VI, the choices that have actually been made by the States that opted for the arbitration provisions, as well as to evaluate whether, ultimately, such flexibility was effective in reaching the goal it was meant to. In order to do so, a preliminary theoretical background about Part VI of the MLI, the mechanics of its opt-in clause, as well as the content of the reservations to Part VI, is given under Sections 1. and 2. The chapter, then, focuses on the results of the...