June 8, 2017
Ministry of Finance
Convention to Implement Measures to Prevent BEPS was Signed
(*) For the latest information on this Convention, please click here.[Provisional translation]
On June 7 (Wed.) [June 8 (Thu.) in Japan], Japan signed the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (Convention to Implement Measures to Prevent BEPS) in Paris.
1. Objective of the Convention
The Convention is intended to introduce the tax treaty related measures, which are part of the measures developed under the BEPS project in order to prevent base erosion and profit shifting (BEPS), into the existing tax treaties between the Parties to the Convention.
The Convention enables the Parties to implement the tax treaty related measures to prevent BEPS with respect to a large number of their existing tax treaties at the same time and in an efficient manner.
2. Background
The final reports of the BEPS project, published in October 2015, have recommended a wide variety of measures to tackle international tax avoidance conducted by multinational enterprises.
Based on the recommendation under Action 15 of the BEPS project, the Convention was drafted through negotiations in which approximately 100 jurisdictions including Japan participated, was adopted at the negotiating meeting on November 24, 2016 and then was opened for signature for all countries and the specified territories on December 31, 2016.
Since the true value of the BEPS project would be fully realized by being implemented in a globally coordinated way, Japan, as one of the countries which has taken the initiative in the BEPS project, has decided to sign the Convention at the signing ceremony held with the participation of 67 jurisdictions with a view to taking appropriate steps toward proper implementation of the achievement of the BEPS project.
3. Next Steps
The deposit of the instruments of ratification, acceptance or approval by five jurisdictions is required for the Convention to enter into force and the Convention will enter into force with respect to the five jurisdictions on the expiry of a specified period after the deposit of the fifth instrument. With respect to each of jurisdictions depositing the instrument of ratification, acceptance or approval thereafter, the Convention will enter into force on the expiry of a specified period after its deposit.
The Convention will enter into effect with respect to a tax agreement covered by the Convention on the expiry of a specified period after the Convention has entered into force with respect to all of the parties to the tax agreement.
In Japan, the approval of the Convention by the Diet is necessary in order for Japan to deposit such an instrument.
[Reference 1] Texts and Key Points of the Convention
- Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting(Japanese text • English text
(1,253KB / 277KB))Note: The Japanese text of the Convention is provisional, which was submitted to the Cabinet for its decision
on signature to the Convention, and may be modified in the course of preparation for the submission of
the Convention to the Diet.
[Reference 2] About Choices of Application of the Convention
- Outline of Japan’s Provisional Choices of Application of the Convention to Implement Measures to Prevent BEPS- Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS [link to the website of the OECD]
[Reference 3] About BEPS Project
- Statement by Minister Aso on the publication of the final reports on BEPS Action Plan- Explanatory Documents submitted by the Ministry of Finance to the 24th Meeting of the Tax Commission (October 23,
2015) regarding the final reports of BEPS Project [link to the website of the Cabinet Office]
- BEPS Project [link to the website of the National Tax Agency]