by Lorys Charalambous, Tax-News.com, Cyprus

15 May 2020

The BEPS multilateral convention entered into force for treaties signed by Cyprus and Saudi Arabia on May 1, 2020.

Any treaty signed by Cyprus or Saudi Arabia that they selected as a “covered agreement” will be modified by the BEPS MLI as from May 1, 2020, providing the BEPS MLI also has effect in the other signatory country and that state also selected the agreement as a “covered agreement”.

The MLI was developed through negotiations involving more than 100 countries and jurisdictions. The MLI enables countries to modify their existing tax treaties to include measures developed under the OECD/G20 BEPS project without having to individually renegotiate these treaties. The instrument will implement minimum standards to counter treaty abuse, prevent the artificial avoidance of permanent establishment status, neutralize the effects of hybrid mismatch arrangements, and improve dispute resolution mechanisms.

Cyprus has allocated 59 treaties as “covered agreements” for the purposes of the BEPS MLI, while Saudi Arabia has listed 55 “covered agreements”.

The BEPS MLI is due to enter into force for Portugal and Uruguay from June 1, 2020.