(source: Reuters)
The international fight against tax avoidance has reached another milestone. On June 7, in Paris, finance ministers and other representatives in charge of more than 60 countries signed a multilateral convention that aims to check cross-border tax evasion. The ceremonial signing was part of the OECD Ministerial Council meeting, in which ministers from the OECD and partner countries discussed issues of global relevance.
Slovak Finance Minister Peter Kažimír signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS [base erosion and profit shifting] for Slovakia.
“Tax avoidance is, alas, a reality,” said Kažimír as cited by the TASR newswire. “I appreciate all the more the fact that we’re involved in bringing countries closer together and in bringing the spotlight on those who try to avoid the rules.”
As a result of the convention, over 1,100 treaties concerning the prevention of double taxation will be modified.
The convention, which is part of the OECD/G20 BEPS Project, seeks to close the gaps in existing international rules that allow corporate profits to “disappear” or be artificially shifted to low or no tax jurisdictions, where companies have little or no economic activity. This ultimately results in corporate income tax avoidance.
The convention will become definitively effective after at least five signatory countries approve it at the national level. Afterwards it will be reflected in bilateral contractual obligations of signatory countries. Slovakia has chosen all its 64 valid and effective treaties on double taxation for adjustment via the multilateral convention.
