Multilateral Treaty Not Simple, But Clear: OECD’s Saint-Amans

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By Kevin A. Bell

Nov. 29 — The OECD’s ground-breaking multilateral tax treaty, which will potentially amend thousands of bilateral tax treaties, will add “another layer” to treaty administration—but actual changes to bilateral agreements will be clear to both tax administrations and multinational companies, the organization’s tax chief said.

Taxpayers and tax administrations “will know what the rules are” under the multilateral instrument, Pascal Saint-Amans, head of the Organization for Economic Cooperation and Development’s Center for Tax Policy and Administration, told Bloomberg BNA Nov. 29.

Part of the OECD’s job is to make sure that when a user of the multilateral instrument will have to implement a provision, the provision is “extremely simple to identify and therefore to apply,” Saint-Amans said.

More than 100 countries Nov. 24 formally adopted the “Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting,” which is designed to allow countries to quickly adopt recommendations from the BEPS treaty initiatives, most of which are aimed at curbing tax avoidance by large multinational companies.

“We realize that the way the MLI works—has been designed—is not simple because it is not replacing paragraphs in existing treaties but it’s another layer and it will require some mechanisms to make sure that it is easy to read,” Saint-Amans said. “We are working on that.”

Consolidated Versions

The organization’s tax chief said a very robust transparency mechanism will explain how bilateral treaties are impacted. This can be done through consolidated versions of bilateral treaties. Consolidation isn’t compulsory under the MLI, “but a number of countries will be doing that.” It can also be done through guidance.

“I have been monitoring quite closely the negotiation of the instrument and one of my main concerns since the beginning is how readable will it be?” Saint-Amans said. “It’s not only a question of convenience. It is also a question of legality. If we want this instrument to be a legal instrument it must be readable.”

Existing Protocols

Saint-Amans said the organization is “working on software and some mechanisms to make sure that it will be OK.”

During his work on the MLI, Saint-Amans “realized that the existing treaties may not be easy to read because, in some cases, you have a series of protocols which have never been consolidated.” The MLI “may not be any less readable than the existing difficult environment,” he said.

“It’s also fair to say that the existing system is far from being clear, and we, on our end, will make sure that consolidated versions, or guidance, will be available sitting on the OECD website.”


Under the MLI, the OECD will be the depository of the multilateral instrument and will support governments in the process of its signature, ratification and implementation.

The MLI envisions a process of countries identifying what pieces of the MLI they intend to adopt. Notifications can be made at the time of signature, or when depositing the instrument of ratification or approval. The OECD is required to maintain a list of covered agreements, reservations made by the countries and notifications made by the countries.

Saint-Amans said the burden of preparing the consolidated versions of bilateral treaties “falls on the countries because it is their instrument,” while the OECD will “provide the platform as a depository of the instrument.”

As such, he said, OECD will “not just act as a passive depository of the instrument, where you get the text and that is it.” The organization is working on the construction of its website platform for the depository.

“We want to be an active depository,” he said, “to make sure all the instruments needed to ensure the readability of the instrument will be available on the OECD website.”

June 2017 Signing

A first high-level signing ceremony of the MLI will take place in the week beginning June 5, the OECD announced in a Nov. 24 news release. The OECD expects “participation of a significant group of countries during the annual OECD Ministerial Council meeting, which brings together ministers from OECD and partner countries to discuss issues of global relevance.”

Saint-Amans said Nov. 29 that during his preparatory work on the MLI, he got the sense that “many countries are very much interested” in signing the MLI in June.

More than 70 countries were present during all rounds of the MLI negotiations, Saint-Amans said, and more than 100 jurisdictions were part of the negotiations. It doesn’t mean that all the parties negotiating the instrument will sign the instrument—nor does it mean that some parties that haven’t negotiated won’t sign. “I think that a number of countries that were not part of the negotiation may sign at the end of the day.”


Saint-Amans said that during the MLI negotiations, the OECD asked a number of countries “for their sense” of which bilateral tax treaties they would apply the MLI to, “and which reservations they would make.”

Countries seem to have an appetite for using the MLI to modify as many bilateral tax treaties as possible, Saint-Amans said.

The OECD anticipates that countries will be coordinating their reservations to the MLI bilaterally, he said, and has already started work on facilitating this coordination.

“We have already asked countries to let us know what they will be doing,” the OECD official said. “We have already planned ‘speed dating’ in April.” That month, the OECD is organizing a week of bilateral meetings for countries “to coordinate, to identify which points they would reserve on, and which treaties they would like to activate,” he said.

“That is a lot of work, and that is what we have started doing, and will be doing over the next six months.”

Authentic Languages

The MLI states that it is equally authentic in the French and English languages.

Saint-Amans said the OECD is following the practice of multilateral treaties in areas beyond tax “so the treaty is just in French and English.”

“But we will be working with countries that have other languages,” he said. “I am thinking of Spanish and maybe some others, German for example.” The OECD will help countries with translations of the MLI “which will be harmonized so we don’t have discrepancies there.”

Safety Net

The language “In other cases, this Article shall supersede the provisions of the Covered Tax Agreement only to the extent that those provisions are incompatible with this Article” appears at several places in the MLI.

Saint-Amans explained that this language is a “safety net.” The provisions in bilateral treaties can vary greatly from one treaty to another, he said. “It was hard to have a one-size fits all.” In some cases where there is an existing bilateral treaty provision that isn’t drafted exactly the same way as the provision in the MLI, “countries would like to keep it.”

“It is unlikely to be frequent occurrence,” he said.

Minimum Standards

The MLI is intended to implement the two BEPS treaty-related minimum standards: countering treaty abuse and improving dispute resolution mechanisms.

Saint-Amans said in the case of two countries that have an old bilateral tax treaty and that don’t implement the MLI, “there will be a peer review of how the countries have met the minimum standards.”

The peer review will cover BEPS Action 6, the minimum standard on treaty shopping, he said. “This review will not start too quickly because we want countries to have the opportunity to actually implement their commitments through the MLI.”

“We need to wait another year, or 18 months, to take stock of the progress,” he said.

To contact the reporter on this story: Kevin A. Bell in Washington at

To contact the editor responsible for this story: Molly Moses at

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