On 24 November 2016 the OECD posted to their website the long-awaited Multilateral Instrument (MLI) for implementing tax treaty-related measures set out under the G20/OECD BEPS Project. With over 100 jurisdictions having been involved in the MLI negotiations it is anticipated that in excess of 2,000 double taxation agreements (DTAs), out of the 3,000 plus in existence globally, will be updated. The MLI participant jurisdictions will, over the next six months, need to carefully consider which DTAs to nominate for update and which BEPS updates to opt for, and evaluate how this will interact with the preferences likely to be expressed by other jurisdictions.
The changes that will be made to China’s DTA network, and to the DTA networks of other jurisdictions, will profoundly affect the tax treatment of businesses operating and investing cross-border into and out of China. The likely changes made under the MLI should be fully considered by businesses and the need for adjustment to tax strategies and structures considered. This new edition of China Tax Alert sets out the content of the MLI, the mechanisms through which it will update DTAs, and the implications for the China DTA network.