CMA Damini Agarwal
Quick Summary
Key Impact areas vis--vis Indian Tax Treaties Introduction Multilateral Instruments (MLI) is indeed the talk of the town in the world of International Taxation. Under the OECD*/G20 inclusive framework on Base Erosion and Profit Shifting (BEPS), more than 125 countries are collaborating to put
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FAQ :
The MLI is a global agreement developed under the OECD/G20 inclusive framework on Base Erosion and Profit Shifting (BEPS). It allows countries to modify their network of bilateral tax treaties in a synchronised manner to prevent tax avoidance.
BEPS refers to corporate tax planning strategies used by multinational enterprises to shift profits from higher-tax jurisdictions to lower-tax jurisdictions, thereby eroding the tax base of higher-tax countries.
The MLI entered into force in India on 1st October 2019, and its provisions became effective from 1st April 2020 for 23 Indian bilateral tax treaties.
The MLI introduces a new preamble and a Principal Purposes Test (PPT) into tax treaties to tackle treaty abuse. India has also opted for the Simplified Limitations on Benefit (SLOB) provision.
Key impacts include widening the scope of Permanent Establishment (PE) rules, improving dispute resolution mechanisms, and amending rules for the taxation of capital gains on shares deriving value from immovable property.
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