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Saudi Arabia: Effects of BEPS multilateral instrument (MLI) on tax treaties

Saudi Arabia: Effects of BEPS MLI on tax treaties

The Kingdom of Saudi Arabia has signed the multilateral convention (also known as the multilateral instrument “MLI”) to implement tax treaty-related measures pursuant to the base erosion and profit shifting (BEPS) project of the Organisation for Economic Cooperation and Development (OECD). The MLI addresses aggressive international tax planning that has the intention of shifting profits to low-tax or no-tax jurisdictions.


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The MLI will modify tax treaties between two or more parties to the convention, without the need to re-negotiate their bilateral tax treaties.

Saudi Arabia has released its provisional list of expected reservations and notifications relating to the MLI. These reservations provide that the MLI will not apply the following articles of the “covered” tax treaties in the network of income tax treaties of Saudi Arabia:

  • Article 3 (Transparent entities) 
  • Article 4 (Dual resident entities) 
  • Article 8 (Dividend transfer transactions) 
  • Article 10 (Anti-abuse rule for permanent establishments situated in third jurisdictions)
  • Article 11 (Application of tax agreements to restrict a party's right to tax its own residents) 
  • Article 17 (Corresponding adjustment)

The notification provides a list of tax treaties that Saudi Arabia intends to be covered by each article of the MLI.  For instance, Saudi Arabia has listed 53 tax treaties to be covered by Article 2 (Interpretation of terms) of the MLI.


Read a November 2018 report [PDF 183 KB] prepared by the KPMG member firm in Saudi Arabia

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