The UK deposited its MLI ratification instrument and final positions (opt-ins and opt-outs) with the OECD on 29 June 2018. This means that the MLI will come into force for the UK on 1 October 2018. Determining when the MLI will begin to modify the impact of the UK’s double tax treaties, and how it will do so, is more complex.
When the MLI comes into force for other territories
The date from which the MLI will begin to modify any specific treaty will first depend on when the MLI comes into force in the territory of our treaty partner. Apart from the first five countries to ratify (Austria, Isle of Man, Jersey, Poland and Slovenia), for which the MLI came into force on 1 July 2018, it will come into force for each other territory three clear months after they have deposited their instrument of ratification and final positions with the OECD.
Date MLI begins to take effect
The date from which the MLI will actually begin to modify a specific treaty (ie when it enters into effect) will depend upon the aspect of the treaty being considered and (in some cases) the options and reservations the treaty partners have made in relation to that article. It will therefore be necessary to consider the matter on a case by case basis, but is broadly as follows.
More than half the UK’s double tax treaties are affected
The UK’s final positions show that it has identified 121 treaties to which it is prepared to apply the MLI (Faroes, Kyrgyzstan and United Arab Emirates having been added and Germany removed from the original draft positions the UK submitted to the OECD on signature of the MLI). Our MLI visualisation map shows half would actually be covered tax agreements at the moment. The remainder are either not listed by the other party (in draft positions submitted by the 73 other current signatories and final positions deposited by the nine current ratifiers/ depositors) or relate to countries that have not so far signed the MLI.
Intent and purpose may prevent benefits accruing
The UK’s positions show the most significant MLI provisions which might have an impact on the UK’s bilateral tax treaties, depending on the positions of the other treaty partners, are: