On June 7, Argentina and other 66 countries and jurisdictions signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("MLI"), within the framework of the Organization for Economic Co-operation and Development ("OECD").
Once in effect for each jurisdiction involved, the MLI will implement a series of tax treaty measures to update the existing network of bilateral tax treaties and to reduce opportunities for tax avoidance. It includes measures against hybrid mismatch arrangements and treaty abuse, strengthened definition of permanent establishment and measures to make mutual agreement procedures more effective.
With the implementation of the MIL -with some reservations- seventeen tax treaties concluded by Argentina will be amended (Australia, Belgium, Canada, Chile, Denmark, Finland, France, Italy, Mexico [I]
, Netherlands, Norway, Russia, Spain, Sweden, Switzerland, United Kingdom, United Arab Emirates
[II])
. Tax treaties with Bolivia, Brazil and Germany are excluded from the MIL.
The MIL has not entered into force yet. Argentina still has to complete the domestic process for ratification with the approval of the Congress. The timing of the entry into force of the modifications of the tax treaties will be effective with the completion of the ratification procedures in the jurisdictions that are parties to the covered tax treaties.
[I] The Argentine-Mexican tax treaty was signed on 04/11/2015. For its entry into force Mexico still has to notify compliance with its internal procedures.
[II] The treaty with the United Arab Emirates was signed on 03/11/2016. For its entry into force, parties still have to approve it through their internal procedures.
