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I. Introduction

A. The Organization for Economic Co-operation and Development (OECD) launched Action Plans on Base Erosion and Profit Shifting (BEPS) in July 2013, and subsequently released final reports relating to these Actions in October 2015.  Among them, Action 2 (Neutralising the Effects of Hybrid Mismatch Arrangements), Action 6 (Preventing the Granting of Treaty Benefits in Inappropriate Circumstances), Action 7 (Preventing the Artificial Avoidance of Permanent Establishment Status), Action 14 (Making Dispute Resolution Mechanisms More Effective), and Action 15 (Developing a Multilateral Instrument to Modify Bilateral Tax Treaties) include tax treaty-related measures.
(For the related documents, please refer to the OECD website at http://www.oecd.org/tax/beps/beps-actions.htm.)

​B. In response to the request of the Group of Twenty (G20), OECD established the Inclusive Framework on BEPS in June 2016 and developed standards on monitoring and peer review mechanisms to enable all members to the Framework to effectively implement suggestions under these Actions.  As the first move, some measures under Action 5 (Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance), Action 6, Action 13 (Transfer Pricing Documentation and Country-By-Country Reporting), and Action 14 were chosen as the “Minimum Standards,” and among them, Action 6 and Action 14 are in relation to tax treaties.
 (For the related information, please refer to the OECD website at http://www.oecd.org/tax/beps/beps-about.htm.)

​C. In order to mitigate the burdensome and time-consuming process that the amendment to the existing tax treaties may bring about, OECD released the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (hereinafter referred to as MLI) formulated under Action 15 in November 2016.  By participating in the MLI, Jurisdictions may swiftly adopt the Minimum Standards and opt in other BEPS measures into their existing tax treaties rather than modifying them one after another.
 (For the related documents, please refer to the OECD website at http://www.oecd.org/tax/treaties/multilateral-convention-to-implement-tax-treaty-related-measures-to-prevent-BEPS.pdf.)

Issued:Dept. of International Fiscal Affairs Release date:2019-05-14 Last updated:2021-01-26 Click times:804