Member News

New Ratifications of the OECD’s Multilateral Instrument Put Canadian Resource Holding Structures at Risk

By Jared Mackey | Greg Johnson | Darcy Moch

Tax-efficient holding structures commonly used by multinational enterprises and private equity firms investing in the Canadian resource sector could soon become subject to anti-treaty shopping measures contained in the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (the “MLI”).

The MLI was negotiated in November 2016 by over 100 member countries in the Organisation for Economic Co-operation and Development (OECD), with the intention of swiftly implementing a series of tax treaty measures to lessen the opportunity for tax avoidance by multinational entities. The MLI does not override or amend existing bilateral tax treaties, but is applied alongside the treaties, modifying their application as necessary. To date, 87 countries have either signed the MLI or expressed an intention to sign, including Canada and most economically developed countries (excluding the United States).

Compliments of Bennett Jones, a member of the EACCNY