The Federal Council in Switzerland has initiated the consultation on the multilateral convention to implement tax-treaty-related measures to prevent base erosion and profit shifting (BEPS convention).
According to a statement from the Federal Council, the consultation is to enable Switzerland to adapt existing double taxation agreements to the minimum standards agreed within the framework of the BEPS project, and the proposal also includes the protocol of amendment to the double taxation agreement (DTA) between Switzerland and the UK. The consultation will last until 9 April 2018.
The OECD adopted the final outcomes of the BEPS project in October 2015. Some BEPS project actions require the adjustments of DTAs which may be adapted either bilaterally or through the BEPS convention to the agreement-related results of the BEPS project.
Almost 70 states and territories, including Switzerland, signed the BEPS convention in Paris on 7 June 2017. Switzerland announced the adjustment of the DTAs with Argentina, Chile, India, Iceland, Italy, Liechtenstein, Lithuania, Luxembourg, Austria, Poland, Portugal, South Africa, the Czech Republic and Turkey at the time of the signing. These states are prepared to agree with Switzerland on the precise wording of the DTAs to be adapted via the BEPS convention.
The BEPS minimum standards can also be agreed through bilateral amendments to DTAs: For example, Switzerland and the UK are adapting the existing DTA to the BEPS minimum standards by means of a bilateral protocol of amendment which they signed on 30 November 2017. This is yet to be approved by parliament in both countries.
The BEPS minimum standards related to DTAs are to be implemented. These make provision for supplementing the preamble of DTAs in terms of purpose, including an agreement abuse clause in DTAs and adjusting the dispute settlement provisions within the framework of memoranda of understanding.
In keeping with its DTA policy, Switzerland additionally advocates including the arbitration clause provided for in the BEPS convention.
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