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A revised peer review document forming the basis of the assessment of the Action 6 minimum standard was also released today.
The third peer review report on the implementation of the Action 6 minimum standard on treaty shopping (also available in French) reveals that a large majority of members of the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework) are translating their commitment on treaty shopping into actions and are modifying their treaty network.
As one of the four minimum standards, BEPS Action 6 identified treaty abuse, and in particular treaty shopping, as one of the principal sources of BEPS concerns. Treaty shopping typically involves the attempt by a person to access indirectly the benefits of a tax agreement between two jurisdictions without being a resident of one of those jurisdictions. To address this issue, all members of the Inclusive Framework have committed to implementing the Action 6 minimum standard and participate in annual peer reviews to monitor its accurate implementation.
The latest report includes the aggregate results of the peer review
and data on tax treaties concluded by each of the 137 jurisdictions that
were members of the Inclusive Framework on 30 June 2020. The data
compiled for this peer review demonstrate that the BEPS Multilateral Instrument
(MLI) has been the tool used by the vast majority of jurisdictions that
have begun implementing the Action 6 minimum standard, and that the MLI
has started to impact tax treaties of jurisdictions that have ratified
it.
The impact and coverage of the MLI are expected to rapidly increase
as jurisdictions continue their ratifications and as other jurisdictions
with large tax treaty networks consider joining it. To date, the MLI
covers 95 jurisdictions and over 1700 bilateral tax treaties.
The revised peer review documents (available in French) also released today form the basis on which the peer review process will be undertaken as of 2021. The consolidated document includes the Terms of Reference which set out the criteria for assessing the implementation of the Action 6 minimum standard, and the Methodology which sets out the procedural mechanism by which the review will be conducted.