On June 7, 2017, government officials and members of the OECD* civil society signed the first-ever multilateral convention to prevent base erosion and profit shifting (BEPS). According to the OECD website, this treaty marks “the first multilateral treaty of its kind”, since it allows the participant jurisdictions to transfer the results of the BEPS project into existing tax treaties.
Here’s a breakdown of the convention will mean for the future:
- The OECD is the acronym to the Organization for Economic Cooperation and Development, which is responsible for promoting economic growth, prosperity and sustainable development. It works as a forum that allows governments and market economies to work together. According to its website, “OECD member countries account for 63 percent of world GDP, three-quarters of world trade, 95 percent of world official development assistance, over half of the world’s energy consumption, and 18 percent of the world’s population.”  Hence, we are talking about powerful economies that together can put a good fight to multinationals.
- The BEPS Project was initiated by the G20 (Group of 20 major economies that are part of the OECD) with the sole purpose to prevent governments from losing annually, what today represents, between $100 billion to $240 billion USD due to BEPS or what could also be translated into 4-10% of global corporate income tax. Under the project, 15 actions have been created to combat tax evasion, including: Hybrid Mismatch Arrangements, Treaty Abuse, Permanent Establishment and Mutual Agreement Procedures (MAP) and MAP arbitration. 
- Now, with the historical multinational treaty the participating countries can transfer the actions from the project into their jurisdiction, improving the international tax environment and establishing consistency among the regulations, making it difficult for multinationals to avoid paying taxes.
This multinational treaty hopes to find concrete solutions and close the current gap by implementing a cohesive tax process for the signatory countries, eliminating double taxation and establishing mechanisms that find a middle ground between both parties. The expectations lay in increasing treaties on an annual basis and strengthening a uniform system.
The success of the treaty has been the result of arduous work that started with a report addressing base erosion and profit shift in 2013. It has evolved into an action plan (including the 15 actions, some highlighted above), a mandate and package proposal in 2015 and a negotiation in 2016, resulting in the signing this past June.
Although the agreement is a significant “win” for governmental authorities and tax regulators, there is still the question of how multinationals will react.
*Organization for Economic Cooperation and Development
Sources https://usoecd.usmission.gov/our-relationship/about-the-oecd/what-is-the-oecd/  https://www.oecd.org/tax/treaties/multilateral-instrument-BEPS-tax-treaty-information-brochure.pdf