Finance Minister Arun Jaitley will travel to Paris next week to sign the OECD multilateral convention that aims to check crossborder tax evasion by multinational companies. During his three-day visit beginning June 7, Jaitley will also attend the OECD Ministerial Council meeting, in which ministers from the OECD and partner countries will discuss issues of global relevance. The Union Cabinet had earlier this month approved signing of the multilateral convention of the Organisation for Economic Cooperation and Development (OECD).
The convention is an outcome of the OECD-G20 BEPS project to tackle base erosion and profit shifting (BEPS) which is resorted to by MNCs through tax planning strategies by exploiting gaps and mismatches in tax rules. It helps them artificially shift profits to low or no- tax locations, resulting in little or no overall corporate tax being paid. Once the convention becomes operational, it will ensure the bilateral tax treaty provisions are read in conjunction with the corresponding provisions in the Multilateral Instrument (MLI) along with related country reservations.
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Over 100 jurisdictions have already concluded negotiations on the MLI and a formal signing of the convention will take place in Paris on June 7. MLI also offers an option to each country to select the provision for adoption in its tax treaty.Besides signing MLI, Jaitley on June 7 and 8 will attend the OECD’s Ministerial Council Meeting, which will discuss a new inclusive growth narrative centred on improving well-being for all in open and digitised economies and define a more people-centred approach to international standard- setting.