The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) is one of the outcomes of the OECD/G20 Project to tackle Base Erosion and Profit Shifting (the "BEPS Project"). It is an agreement negotiated under Action 15 of the BEPS Project. Implementation of the Final BEPS Package will require changes to the bilateral tax treaties (DTAs). Bilateral updates to the treaty network would be a very burdensome and time-consuming exercise, thus the MLI is seen as the solution as it allows jurisdictions to swiftly amend their double taxation avoidance agreements to implement the tax treaty related BEPS recommendations.
Malaysia was involved in the development of the MLI with more than 100 jurisdictions in the Ad Hoc Group. The negotiation of the MLI text was concluded on 24 November 2016 in Paris. The first signing ceremony was held on the 7th of June 2017.
Some of the DTAs have been amended by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”). The MLI does not amend treaties like an amending protocol. Instead, the MLI modifies treaties by sitting alongside treaties.
However, for purposes of clarity, Malaysia has prepared a consolidated text as guidance to aid readers, also known as Synthesised Text (“ST”). The sole purpose of ST is to facilitate the understanding of the application of the MLI to the DTA and ST does not constitute a source of law. The authentic legal texts of the DTA and the MLI take precedence and remain the legal texts applicable.