The Indian Union Cabinet has approved ratification of Multilateral Convention to implement Tax Treaty related measures to prevent base erosion and profit shifting (‘Multilateral Convention’ or ‘MLI’ or ‘the Convention’). In this regard, Press Information Bureau had issued a Press release dated 12 June 2019.
MLI was initially signed by India on 7 June 2017 by then Hon'ble Finance Minister Sh. Arun Jaitley at Paris. Post ratification of MLI, India will need to submit ratified copy of MLI with the Organization for Economic Co-operation and Development (‘OECD’) Depositary i.e. the Secretary- General of OECD. India will also be required to submit final list of tax treaties it wishes to be modified by MLI and its final positions on MLI Articles so that MLI can ‘enter into force’ as per the prescribed timelines specified by OECD.
Ratification of MLI will modify India's treaties in order to curb revenue loss through treaty abuse and base erosion and profit shifting strategies that are taxed where substantive economic activities generating the profits are carried out and where value is created.