The OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting was signed, on behalf of the State of Hungary, by Deputy State Secretary László Balogh yesterday in Paris, alongside more than 70 ministers and other high-level representatives.

The Multilateral Convention is a new multi-lateral legal instrument that enables the concurrent amendment of several hundreds of tax treaties under the OECD model tax treaty, removing the necessity to conduct lengthy bilateral negotiations. It also opens the way for the swift implementation of the 15-point action plan of the Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting. The action plan aims to support governments in securing tax revenues required to fund social services, while it also helps provide the private sector with predictable business conditions.

One of the most important consequences of the Convention is that uniform measures against tax-fraud may be incorporated into a high number of bilateral tax treaties within a short period of time, thus fending off new tax optimization strategies.  The OECD estimates that multinational enterprises reduce liabilities by USD 100-240bn per year through such schemes.

(Ministry for National Economy)