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| May 2, 2018

MLI comes into force July 1st, 2018

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The MLI (Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting) is a revolutionary instrument aiming, for the first time ever, to provide a general regulation of the currently in force international conventions for the avoidance of double taxation. The regulations should prevent misuse of the advantages arising from said conventions, if these are used for tax evasion; they provide for conditions for setting up a permanent establishment and income taxation connected to it and further, it shall bring an improvement of the mechanism for dispute settlement in the context of interpretation of a convention for the avoidance of double taxation.

Under the terms of the Convention signed July 7th, 2017 by more than 70 OECD member states, it will come into force on the first day of the calendar month following the three month period that started upon the ratification of the Convention by the fifth state. The fifth state to ratify the Convention was Slovenia on March 22nd, 2018. The first four states to ratify this Convention were: Austria (October 22nd, 2017), Isle of Man (October 19th, 2017), Jersey (December 15th, 20197), and Poland (January 23rd, 2018).