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OECD Multilateral Instrument (MLI) to implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS)

The Mauritius Revenue Authority (MRA) has, in the recent past, published on its website an article on the Impact of the MLI on the Mauritius Tax Treaties. The purpose of this present write-up is to help our readers understand clearly how some of our existing Tax Treaties have been modified by the MLI which Mauritius signed on 5 July 2017.

Under the Mauritius Tax laws, the MLI was the subject matter of the Income Tax (BEPS) Regulations 2019 issued on 27 September 2019 under the Government Notice No 180 of 2019. Mauritius deposited its instrument of ratification with the Secretary General of the OECD on 18 October 2019. The MLI entered into force for Mauritius on 1 February 2020 (i.e., the first day of the month following the expiration of a period of 3 calendar months beginning on the date of the deposit by Mauritius of its instrument of ratification). However, the amendments to the Treaties being modified by the MLI take effect from 1 August 2020 onwards, being given that the date of entry into effect is the basis period following the expiration of 6 calendar months after the MLI enters into force for Mauritius and other jurisdictions.

List of treaties notified under the MLI

Jurisdictions that sign the MLI are required to notify which of their tax treaties they want the MLI to apply and modify. The tax treaties which are covered by the MLI are called ‘Covered Tax Agreements’ (CTAs). At the point of ratification on 18 October 2019, Mauritius intends for the MLI to apply to 44 existing DTAAs. Each DTAA will only be amended if Mauritius’ treaty partner also chooses to amend it using the MLI.  The list of signatories and parties to the MLI and the Mauritius MLI position is available on the OECD website @

How the MLI works?

Both treaty partners need to identify their tax treaty as a CTA for that treaty’s operation to be modified by the MLI. If only one jurisdiction (or neither jurisdiction) identifies a tax treaty as a CTA, the provisions of that treaty will remain un-modified. For example, only Mauritius has identified Mauritius -Jersey tax treaty under the MLI and therefore the treaty will remain un-modified unless Jersey decides to include the treaty as a CTA or alternatively decide to amend the treaty to implement the BEPS Tax Treaty related measures through bilateral negotiations.

The MLI incorporates flexibility that allows jurisdictions to tailor their adoption to fit their particular national circumstances and accommodate unique aspects of their treaty network.  When Mauritius signed the MLI it notified the OECD Secretariat of its set of provisional choices referred to as “Mauritius MLI position” and that position was confirmed by Mauritius at the time of ratification. Readers can consult the “Mauritius MLI position” which is available on the MRA website or the OECD website @

The MLI allows jurisdictions to swiftly implement the tax treaty related BEPS recommendations. These recommendations include both mandatory provisions (i.e. the minimum standards under the BEPS project) as well as non-mandatory provisions. Mauritius has adopted the mandatory articles which are summarized below:

Article 6 – Purpose of a CTA

New treaty preamble clarifies that tax treaties are not intended to create opportunities for non-taxation or reduced taxation through tax evasion or avoidance including through treaty-shopping arrangements.

Concerning this particular Article, Mauritius has included the optional text indicating a desire to further develop its economic relationship with other Contracting Jurisdictions and enhance cooperation in Tax matters.

Article 7- Prevention of Treaty Abuse

New anti-abuse rules will enable tax administrations to deny treaty benefits in certain circumstances and under this Article Mauritius has adopted the Principal Purposes Test (PPT).

Article 16- Mutual Agreement Procedure

 The minimum standard for improving dispute resolution under Action 14 requires jurisdictions to allow a taxpayer to present a case to the competent authority of either Contracting Jurisdiction for mutual agreement assistance. The competent authority shall endeavour to resolve the case by mutual agreement with the other competent authority. This will provide taxpayers with a more effective tax treaty-based dispute resolution procedure. Mauritius has adopted Article 16 without reservation.

Article 17 – Corresponding adjustments (best practice article)

The minimum standard under Action 14 requires jurisdictions to provide access to the MAP in transfer pricing cases and implement the resulting mutual agreements. In addition, it would be more efficient if jurisdictions also had the possibility to provide for corresponding adjustments unilaterally in cases where they find the taxpayer’s objection to be justified. Mauritius has adopted Article 17. Article 17 will apply in the absence of the provision in the tax treaties Mauritius has with Belgium, France, Malaysia, Oman, Tunisia and Zimbabwe and will apply in place of the existing provisions in the remaining CTAs, to the extent that the Contracting Jurisdictions have also adopted Article 17.

Mauritius has also adopted the optional Articles 18-26 on arbitration, namely Part VI of the MLI which enables countries to include mandatory binding treaty arbitration (MBTA) in their CTAs in accordance with the special procedures provided by the MLI. This arbitration provision may, in practice, prove to be beneficial to taxpayers. Unlike the other articles of the MLI, Part VI applies only between jurisdictions that expressly choose to apply Part VI with respect to their tax treaties. Currently, 30 countries, including Mauritius, have committed to adopting and implementing MBTA in their CTAs.

Treaties modified by the MLI

We welcome the initiative taken by the MRA to help stakeholders understand the effect of the MLI on Mauritius’ tax treaties through the publication on its website of supporting material and guidance including synthesised texts. A synthesised text helps users of the MLI understand how the MLI modifies the operation of the particular tax treaty.

A synthesised text presents the following in a single document:

  • the text of the tax treaty which is modified by the MLI, including the text of amending instruments such as protocol;
  • the provisions of the MLI that have an effect on the tax treaty as a result of the interaction of the MLI positions of the jurisdictions;
  • the dates on which the provisions of the MLI take effect for the tax treaty.

It is important to note that a synthesised text does not constitute a source of law and its sole purpose is to facilitate the understanding of the application of the MLI to a particular tax treaty. The authentic legal texts of the tax treaty and the MLI take precedence and remain the legal texts applicable.

So far, synthesised texts have been prepared and are available on the MRA website for the treaties with the following 17 jurisdictions:

Barbados, Belgium, Croatia, Cyprus, Egypt, France, Guernsey, Luxembourg, Malaysia, Malta, Monaco, Oman, Pakistan, Qatar, Singapore, UAE and UK.

The following 7 other treaties will be modified by the MLI but synthesised texts are not yet available:

China, Italy, Kuwait, Seychelles, Sweden, South Africa and Thailand

Regarding the Mauritius-Germany treaty, both jurisdictions have listed the treaty as a CTA under the MLI. However, in view of the specificities of the German legal system, it was necessary to negotiate a protocol between Mauritius and Germany to amend the treaty to implement the BEPS Tax Treaty Related Measures. That protocol is awaiting ratification.

Treaties not modified by the MLI

Based on current MLI positions or jurisdictions that have not signed the MLI, treaties with the 19 jurisdictions listed below will not be modified by the MLI.

Bangladesh, Botswana, Cabo Verde, Congo, Estonia, Eswatini, Ghana, India, Jersey, Lesotho, Madagascar, Mozambique, Namibia, Nepal, Rwanda, Sri Lanka, Tunisia, Uganda and Zimbabwe

The treaties with Estonia and Lesotho are already compliant with the necessary measures to prevent BEPS. The protocols to existing treaties with Bangladesh, India, Mozambique and Uganda are awaiting signature. A new treaty has been negotiated with Botswana and is awaiting signature. As regards the remaining treaties, Mauritius will, in line with its commitment as a BEPS Associate, work with its treaty partners on a bilateral basis to update these treaties and make them compliant with international standards.

Taxpayers’/Investors’ concerns over PPT

Many taxpayers and investors are wondering whether the inclusion of the PPT in Mauritius treaties will make it more difficult for Mauritius resident taxpayers to enjoy treaty benefits. In addressing those concerns, it should be pointed out that the PPT seeks to deny treaty benefits in cases where one of the principal purposes of the arrangement or transaction is to secure a benefit under the treaty in a manner that is contrary to the objects and purposes of the treaty. Therefore taxpayers and investors with bona fide commercial transactions or operations should not be unduly worried with the PPT which seeks to tackle abusive arrangements.

M.Hannelas, FCCA, Head of Tax Advisory Services Dept, DTOS

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