Thomson Reuters – A New Multilateral World

The OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the multilateral instrument or “MLI”) is now law in Canada. The MLI was Action 15 of the Base Erosion and Profits Shifting (BEPS) Project. With respect to taxpayers claiming benefits under Canadian bilateral treaties the MLI is effective January 1, 2020 with respect to withholding under 28 bilateral treaties and effective for tax years beginning June 1, 2020 with respect to all other taxes levied by Canada or one of these bilateral treaty countries. The MLI uses a “reservation” process whereby either Canada and the bilateral treaty partner can reserve with respect to certain provisions in the MLI, in either case the particular MLI provision may not apply or may apply in modified form with respect to that particular bilateral treaty.