Announcement of the Ministry of Finance of the Republic of Cyprus ‘Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting’ (Multilateral Instrument)
The Ministry of Finance announces that the Republic of Cyprus on June 7th, 2017 has co-signed the Multilateral Tax Convention along with 70 other jurisdictions members of the Organization for Economic Co-operation and Development (OECD). The signing ceremony took place in Paris at the premises of the Organization for Economic Cooperation and Development. On behalf of the Republic of Cyprus, the Multilateral Instrument was signed by the Ambassador of the Republic of Cyprus in Paris Mr. Eliades D. Pantelakis.
The OECD developed the Multilateral Instrument so as to swiftly enable the amendment of existing bilateral Double Taxation Treaties.
The ratification of the Multilateral Convention on Tax Treaty Related Measures will pave the way for updating all existing Double Tax Agreements by incorporating the two minimum standards of Action 6 (Preventing the Granting of Treaty Benefits in Inappropriate Circumstances) and the minimum standard of Action 14 (Making Dispute Resolution Mechanisms More Effective) of BEPS project in the context of safeguarding and orderly application of the existing Double Tax Agreements. In the context of BEPS Action 6 (Preventing the Granting of Treaty Benefits in Inappropriate Circumstances) Cyprus’ adopted the ‘Principal Purpose Rule’ (PPT) instead of ‘Detail Limitation of Benefit Rule’ or the choices of combine the two.