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MLI:s styrkor och svagheter - En skatterättslig analys av OECD:s multilaterala instruments potentiella genomslagskraft och funktionalitet

Curovic, Tara LU (2018) JURM02 20181
Department of Law
Faculty of Law
Abstract
To this day, 78 states have signed the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The purpose of the convention is to swiftly implement tax treaty related BEPS measures without having to bilaterally implement those changes in every tax treaty. The parties of the convention are free to choose which of their tax treaties that are to be covered by the MLI. They are also given the opportunity to opt out of the MLI provisions. Thus, the scope of the MLI depends on how the parties of the convention choose to approach the instrument. Considering that the MLI constitutes a new layer within international tax law, and furthermore its multilateral character, it entails new... (More)
To this day, 78 states have signed the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The purpose of the convention is to swiftly implement tax treaty related BEPS measures without having to bilaterally implement those changes in every tax treaty. The parties of the convention are free to choose which of their tax treaties that are to be covered by the MLI. They are also given the opportunity to opt out of the MLI provisions. Thus, the scope of the MLI depends on how the parties of the convention choose to approach the instrument. Considering that the MLI constitutes a new layer within international tax law, and furthermore its multilateral character, it entails new interpretative questions. Therefore, the purpose of this essay is to investigate how the parties of the MLI chose to formulate their positions to the convention, to describe the various complications and interpretative issues that can emanate as a result of the structure of the MLI, its function and multilateral character, as well as to analyse how the purpose of the MLI relates to the aforementioned factors.

Generally, the parties of the MLI chose to include a lot of their tax treaties while at the same time opting out of several provisions. Even OECD countries are relatively restrictive in their MLI positions. Despite indications that MLI provisions with previous counterparts in the OECD model convention gained a greater impact, it’s difficult to determine patterns as to why the parties of the conventions made their decisions. Some indications show that the parties of the convention didn’t have enough time to prepare for the MLI, resulting in them being more restrictive in their MLI positions. Furthermore, the parties of the convention can choose to expand the scope of the MLI at a later stage, but not the opposite. This could potentially explain the parties’ resistance of initially including more provisions.

The “Explanatory Statement”, which was adopted at the same time as the MLI, clarifies how the MLI intends to modify existing tax treaties. The standing of this document as a means of interpretation and whether or not it can be used in accordance with article 31-33 in the Vienna Convention is debated. It is the authors opinion that the discussion regarding this issue is redundant, considering the explanatory statement doesn’t provide any interpretative guidance regarding the substantial provisions in the MLI. Instead, guidance can be found in the OECD commentaries as well as the BEPS reports in which the measures implemented in the MLI were developed. Taking the multilateral characteristics of the MLI into account, it is difficult to determine the standing of the mentioned documents as means of interpretation. All parties to the convention didn’t participate in the drafting of the MLI or the BEPS project. Furthermore, there are parties to the convention that included tax treaties that aren’t based on the OECD model convention. This makes it difficult to justify a use of the OECD commentaries as interpretative aid. However, the interpretative challenges could be solved through subsequent changes in the OECD commentaries. Although it is difficult to justify an ambulatory usage to the OECD commentaries in the interpretation of the MLI.

Interpretative questions could arise from the way which the parties of the convention are going to implement the changes of the MLI in their domestic legislation. MLI is intended to be read together with existing tax treaties. If the two documents are combined it might be unclear which provisions ought to be interpreted with what means of interpretation, as well as how the interaction between the different types of means of interpretation will be. Regardless of how the parties of the convention choose to implement the MLI, the provisions in the convention could change and be updated in the future. This will likely require further internal and bilateral procedures for the incorporation of changes in the domestic law systems.

The essay analyses how the aforementioned problems relate to the explicit purpose of the MLI. Furthermore, the problem is analysed in relation to meeting the MLI purpose in a greater context, meaning the MLI being a result of BEPS. The essay’s investigation shows that there is a direct correlation between meeting the explicit purpose of the MLI and how the parties have chosen to relate to the instrument. As previously mentioned, it faults in this regard. That being said, it would most likely have been more time consuming to implement the BEPS-actions bilaterally, than through the MLI. More parties might however withdraw several reservations as well as add more tax treaties within the scope of MLI if it turns out to be a fully functional judicial instrument. However, the number of reservations put in effect isn’t as relevant to achieving the purpose of MLI in the greater context. The flexibility of the instrument has brought about many states to sign the MLI. If the instrument hadn’t been flexible at all, it’s not inconceivable that many states hadn’t signed it. The potential issues of interpretation that the MLI brings could however affect the purpose of the MLI. There are many different potential means of interpretation to take into account and these are meant to be interpreted alongside standard tax law interpretation. This brings a risk of the interpretation not being unison, making it incompatible with the purpose of the MLI.

In conclusion it could be stated that whether or not the purpose of the MLI in the greater context can be achieved is yet to be proven. If the parties view the MLI as a one-time modification it will likely complicate future interpretation of the MLI and tax treaties. If the parties instead view the MLI as a dynamic instrument and use the possibilities for creating joint guidance in how to interpret the MLI, it will at the very least produce a more unison interpretation. This will benefit the purpose of the MLI. (Less)
Abstract (Swedish)
För närvarande har 78 stater signerat OECD:s multilaterala konvention för att implementera BEPS-åtgärder (MLI). Syftet med konventionen är att snabbt implementera skatteavtalsrelaterade BEPS-åtgärder i skatteavtal utan att bilateralt behöva omförhandla dessa. Konventionsparterna kan själva välja vilka skatteavtal de vill ska omfattas av MLI och ges stora möjligheter att reservera sig mot bestämmelserna. MLI:s räckvidd beror således på hur konventionsparterna väljer att förhålla sig till instrumentet. På grund av att MLI utgör ett ny aspekt i den internationella skatterätten och på grund av dess multilaterala karaktär, medför det nya tolknings- och tillämpningssvårigheter. Uppsatsen syftar därför till att utreda hur MLI:s konventionsparter... (More)
För närvarande har 78 stater signerat OECD:s multilaterala konvention för att implementera BEPS-åtgärder (MLI). Syftet med konventionen är att snabbt implementera skatteavtalsrelaterade BEPS-åtgärder i skatteavtal utan att bilateralt behöva omförhandla dessa. Konventionsparterna kan själva välja vilka skatteavtal de vill ska omfattas av MLI och ges stora möjligheter att reservera sig mot bestämmelserna. MLI:s räckvidd beror således på hur konventionsparterna väljer att förhålla sig till instrumentet. På grund av att MLI utgör ett ny aspekt i den internationella skatterätten och på grund av dess multilaterala karaktär, medför det nya tolknings- och tillämpningssvårigheter. Uppsatsen syftar därför till att utreda hur MLI:s konventionsparter har valt att förhålla sig till MLI, att redogöra för komplikationer och tolkningsproblem som kan uppstå till följd av MLI:s uppbyggnad, funktion och multilaterala karaktär, samt att analysera hur dessa faktorer ställer sig i förhållande till uppnåendet av syftet med MLI.

Generellt har MLI:s konventionsparter valt att inkludera många skatteavtal, men samtidigt reserverat sig mot många bestämmelser. Även OECD-länderna har varit förhållandevis restriktiva i utformandet av sin inställning till MLI. Trots indikationer som tyder på att MLI-artiklar med tidigare motsvarigheter i OECD:s modellavtal har fått större genomslag, är det svårt att utröna mönster i varför konventionsparterna har valt som de har gjort. En del talar för att konventionsparterna inte hade tillräckligt med tid att förbereda sig för MLI och att de därför har varit mer restriktiva i sin inställning. Vidare kan konventionsparterna senare utöka MLI:s tillämpningsområde men inte det motsatta, vilket också kan förklara oviljan att omfatta fler bestämmelser.

Hur MLI:s bestämmelser ska modifiera och förändra befintliga skatteavtal förklaras i ett dokument benämnt ”De tekniska uttalandena”. Vilken status som tolkningsmedel detta dokument har och hur det ska inordnas under Wienkonventionens tolkningsregler är emellertid omdebatterat. Min åsikt är emellertid att diskussionen kring detta är stundtals överflödig eftersom de tekniska uttalandena inte ger någon vägledning i hur MLI:s materiella bestämmelser ska tolkas. Mer vägledning ges i stället OECD-kommentarerna och BEPS-rapporterna i vilka åtgärderna som speglas i MLI har utvecklats fram. I och med MLI:s multilaterala karaktär är det svårt att fastställa de nämnda dokumentens status som tolkningsmedel. Alla konventionsparter har inte deltagit i framtagandet av MLI eller i framtagandet av BEPS. Vidare finns konventionsparter som har omfattat skatteavtal som inte är baserade på OECD:s modellavtal, vilket gör det svårt att motivera en användning av OECD-kommentarerna. Emellertid bör uppmärksammas att tolkningen hade kunnat underlättats genom efterföljande ändringar i OECD-kommentarerna. Ett ambulatoriskt synsätt på OECD-kommentarerna i tolkandet av MLI är emellertid svårt att motivera.

Hur staterna kommer att implementera ändringarna som MLI innebär i sin interna rätt är också en fråga som kan ge upphov till tolkningsproblematik. MLI är ämnat att läsas ihop med befintliga skatteavtal. Om dokumenten förs samman kan det bli oklart vilka bestämmelser som ska tolkas med hjälp av vilka tolkningsmedel, samt hur interaktionen dem emellan kommer att gå till. Oavsett hur konventionsparterna väljer att implementera MLI kan hända att instrumentet i framtiden uppdateras och förändras. Det kommer sannolikt kräva vidare internrättsliga och bilaterala åtgärder för införlivande av sådana ändringar i den nationella rätten.

I uppsatsen analyseras hur ovanstående problematik förhåller sig till MLI:s konkreta syfte, det vill säga att snabbt implementera skatteavtalsrelaterade BEPS-åtgärder. Vidare analyseras hur problematiken förhåller sig till uppnåendet av MLI:s syfte i ”den större kontexten”, menat som MLI som ett resultat av BEPS. Undersökningen i uppsatsen visar att uppnåendet av MLI:s konkreta syfte har ett direkt samband med hur konventionsparterna har valt att förhålla sig till instrumentet. Som påpekat brister det i detta hänseende. Med det sagt hade det med största sannolikhet gått långsammare att implementera BEPS-åtgärderna bilateralt, än genom MLI. Om MLI dessutom visar sig vara ett funktionellt rättsligt instrument, lär flera konventionsparter dra tillbaka reservationer samt lägga till fler skatteavtal inom MLI:s omfång. Hur många reservationer som har gjorts är emellertid inte lika relevant för uppnåendet av MLI:s syfte i den större kontexten. MLI:s flexibilitet har även medfört att många stater har signerat konventionen. Hade instrumentet inte varit flexibelt hade förmodligen inte så många signerat det. De potentiella tolkningsproblem som MLI medför kan ha inverkan på MLI:s syfte. Då det finns många olika tolkningsmedel att ta hänsyn till och då detta ska ske jämte vanlig skatteavtalstolkning finns risk för att tolkningen inte blir enhetlig och harmoniserad, vilket är oförenligt med MLI:s syfte. Avslutningsvis kan konstateras att huruvida MLI:s syfte i den större kontexten kommer att uppfyllas återstår att se. Om konventionsparterna ser MLI som en engångsmodifiering kommer det sannolikt försvåra tolkandet av MLI och skatteavtal i framtiden. Om konventionsparterna i stället ser MLI som ett rörligt instrument och utnyttjar möjligheterna till att gemensamt skapa vägledning i hur konventionen ska tolkas, så kommer i vart fall tolkningen bli mer enhetlig vilket är fördelaktigt för uppfyllandet av instrumentets syfte. (Less)
Please use this url to cite or link to this publication:
author
Curovic, Tara LU
supervisor
organization
alternative title
The strenghts and weaknesses of the MLI - A tax law analysis of the OECD multilateral convention and its potential impact and functionality
course
JURM02 20181
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
skatterätt, BEPS, OECD, MLI
language
Swedish
id
8941101
date added to LUP
2018-06-08 09:41:07
date last changed
2018-06-08 09:41:07
@misc{8941101,
  abstract     = {To this day, 78 states have signed the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The purpose of the convention is to swiftly implement tax treaty related BEPS measures without having to bilaterally implement those changes in every tax treaty. The parties of the convention are free to choose which of their tax treaties that are to be covered by the MLI. They are also given the opportunity to opt out of the MLI provisions. Thus, the scope of the MLI depends on how the parties of the convention choose to approach the instrument. Considering that the MLI constitutes a new layer within international tax law, and furthermore its multilateral character, it entails new interpretative questions. Therefore, the purpose of this essay is to investigate how the parties of the MLI chose to formulate their positions to the convention, to describe the various complications and interpretative issues that can emanate as a result of the structure of the MLI, its function and multilateral character, as well as to analyse how the purpose of the MLI relates to the aforementioned factors. 

Generally, the parties of the MLI chose to include a lot of their tax treaties while at the same time opting out of several provisions. Even OECD countries are relatively restrictive in their MLI positions. Despite indications that MLI provisions with previous counterparts in the OECD model convention gained a greater impact, it’s difficult to determine patterns as to why the parties of the conventions made their decisions. Some indications show that the parties of the convention didn’t have enough time to prepare for the MLI, resulting in them being more restrictive in their MLI positions. Furthermore, the parties of the convention can choose to expand the scope of the MLI at a later stage, but not the opposite. This could potentially explain the parties’ resistance of initially including more provisions. 

The “Explanatory Statement”, which was adopted at the same time as the MLI, clarifies how the MLI intends to modify existing tax treaties. The standing of this document as a means of interpretation and whether or not it can be used in accordance with article 31-33 in the Vienna Convention is debated. It is the authors opinion that the discussion regarding this issue is redundant, considering the explanatory statement doesn’t provide any interpretative guidance regarding the substantial provisions in the MLI. Instead, guidance can be found in the OECD commentaries as well as the BEPS reports in which the measures implemented in the MLI were developed. Taking the multilateral characteristics of the MLI into account, it is difficult to determine the standing of the mentioned documents as means of interpretation. All parties to the convention didn’t participate in the drafting of the MLI or the BEPS project. Furthermore, there are parties to the convention that included tax treaties that aren’t based on the OECD model convention. This makes it difficult to justify a use of the OECD commentaries as interpretative aid. However, the interpretative challenges could be solved through subsequent changes in the OECD commentaries. Although it is difficult to justify an ambulatory usage to the OECD commentaries in the interpretation of the MLI. 

Interpretative questions could arise from the way which the parties of the convention are going to implement the changes of the MLI in their domestic legislation. MLI is intended to be read together with existing tax treaties. If the two documents are combined it might be unclear which provisions ought to be interpreted with what means of interpretation, as well as how the interaction between the different types of means of interpretation will be. Regardless of how the parties of the convention choose to implement the MLI, the provisions in the convention could change and be updated in the future. This will likely require further internal and bilateral procedures for the incorporation of changes in the domestic law systems. 

The essay analyses how the aforementioned problems relate to the explicit purpose of the MLI. Furthermore, the problem is analysed in relation to meeting the MLI purpose in a greater context, meaning the MLI being a result of BEPS. The essay’s investigation shows that there is a direct correlation between meeting the explicit purpose of the MLI and how the parties have chosen to relate to the instrument. As previously mentioned, it faults in this regard. That being said, it would most likely have been more time consuming to implement the BEPS-actions bilaterally, than through the MLI. More parties might however withdraw several reservations as well as add more tax treaties within the scope of MLI if it turns out to be a fully functional judicial instrument. However, the number of reservations put in effect isn’t as relevant to achieving the purpose of MLI in the greater context. The flexibility of the instrument has brought about many states to sign the MLI. If the instrument hadn’t been flexible at all, it’s not inconceivable that many states hadn’t signed it. The potential issues of interpretation that the MLI brings could however affect the purpose of the MLI. There are many different potential means of interpretation to take into account and these are meant to be interpreted alongside standard tax law interpretation. This brings a risk of the interpretation not being unison, making it incompatible with the purpose of the MLI.

In conclusion it could be stated that whether or not the purpose of the MLI in the greater context can be achieved is yet to be proven. If the parties view the MLI as a one-time modification it will likely complicate future interpretation of the MLI and tax treaties. If the parties instead view the MLI as a dynamic instrument and use the possibilities for creating joint guidance in how to interpret the MLI, it will at the very least produce a more unison interpretation. This will benefit the purpose of the MLI.},
  author       = {Curovic, Tara},
  keyword      = {skatterätt,BEPS,OECD,MLI},
  language     = {swe},
  note         = {Student Paper},
  title        = {MLI:s styrkor och svagheter - En skatterättslig analys av OECD:s multilaterala instruments potentiella genomslagskraft och funktionalitet},
  year         = {2018},
}