27/06/2018 – Peru today signed a landmark treaty to improve the international tax system. The signing of the BEPS Multilateral Convention came during the fifth plenary meeting of the Inclusive Framework on BEPS held in the Lima on 27-28 June 2018.
“Peru’s signature of the Multilateral Convention sends a clear signal of determination to move forward decisively in international tax co-operation,” Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration said. “With a stroke of the pen, three of Peru’s bilateral tax treaties will be strengthened automatically following the entry into effect of the Convention.”
The Convention, negotiated by more than 100 countries and jurisdictions under a mandate from the G20 Finance Ministers and Central Bank Governors, is one of the most prominent results of the OECD/G20 BEPS project. It is the world’s leading instrument for updating bilateral tax treaties and reducing opportunities for tax avoidance by multinational enterprises. Measures included in the Convention concern hybrid mismatch arrangements, treaty abuse, permanent establishment, and dispute resolution, including an optional provision on mandatory binding arbitration, which has been taken up by 28 jurisdictions.
Peru’s signature was witnessed by over 160 senior officials from ministries of finance and tax administrations from around 80 jurisdictions participating in the meeting of the Inclusive Framework on BEPS. The Convention is one of the key agenda items, focusing on the effective implementation by existing signatories and the expansion of its membership.
Peru is the 80th jurisdiction to join the Convention. Additional treaties can be updated automatically once Peru’s other treaty partners join the Convention. The Convention will help to protect Peru’s tax base introducing a general anti-avoidance measure as well as improved dispute resolution mechanisms to Peru’s tax treaties.
Peru’s signature comes a few days before the Convention enters into force on 1 July 2018 for five of the jurisdictions – Austria, the Isle of Man, Jersey, Poland and Slovenia – that signed last year. For Peru, the Convention will enter into force following the completion of the ratification procedures that are expected to commence shortly.
The OECD/G20 BEPS Project delivers solutions for governments to close the gaps in existing international rules that allow corporate profits to “disappear” or be artificially shifted to low or no tax environments, where companies have little or no economic activity. Revenue losses from BEPS are conservatively estimated at up to USD 240 billion annually, or the equivalent of up to 10% of global corporate income tax revenues.
The text of the Convention, the explanatory statement, background information, database, and position of each signatory are available at http://oe.cd/mli.
Media queries should be directed to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, (+33 6 26 30 49 23).