The Japanese government on July 1 published the synthesized text of the Japan-United Arab Emirates 2013 tax treaty, taking into account changes made by the bilateral tax treaty on account of both countries’ later ratification of the the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
The MLI was created as a result of the OECD/G20 base erosion profit shifting (BEPS) plan to swiftly implement into countries’ bilateral tax treaties provisions that reduce opportunities for tax avoidance by multinational groups and that improve cross-border tax dispute resolution mechanisms avaliable to multinationals.
The MLI entered into force for the Japan-UAE tax treaty on December 24, 2014. According to a summary of the MLI changes to the Japan-UAE tax treaty, prepared by the Japanese government, the MLI will affect the preamble to the tax treaty, adding language clarifying that the treaty will not be used create opportunities for reduced taxation. It also adds a principal purpose test to combat tax treaty shopping, adds provisions on transfer pricing corresponding adjustments, and new provisions on the mutual agreement procedure for resolving tax treaty disputes.
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