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Update on Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) (MLI)
As highlighted in earlier alerts, on 24 January 2018, Malaysia signed the MLI (see Tax Alert No. 4/2018). Briefly, the MLI allows the Government to effectively implement the anti-BEPS tax treaty measures by modifying existing tax treaties in a synchronized, simultaneous and efficient manner, without the need to renegotiate each treaty separately.
On 18 February 2021, Malaysia deposited its instrument of ratification for the MLI (see Tax Alert No. 5/2021). The MLI will come into force on 1 June 2021. However, the effective date of the relevant provisions under the MLI will depend on the dates the treaty partner countries deposit their instruments of ratification. The extent of modification to the tax treaties will also depend on the final positions adopted by the other countries.
The IRB has recently published on its website the latest list of signatories and parties to the MLI, along with each country’s position, as of 6 March 2023. The website also outlines the list of Malaysia’s treaties which will be modified by the MLI based on each country’s position as of March 2023. The above-mentioned lists are available at the following link [see Sections A and C].