Multilateral Instrument: Analysis On The Application Of The Entry-Into-Force And The Entry-Into-Effect Articles To Covered Tax Agreements (Part 2)

Author:Dr. Alfred Chan
Profession:China Tax & Investment Consultants Ltd
 
FREE EXCERPT

[4] Article 35(4): Provision to which Article 16 - Mutual Agreement Procedure applies

  1. Entry into effect with respect to Mutual Agreement Procedure

    Article 35(4) provides that Article 16 (MAP) shall have effect with respect to a CTA for a case presented to the competent authority of a contracting jurisdiction on or after the latest of the dates on which the MLI comes into force for each of the contracting jurisdictions to the CTAs, except for cases that were not eligible to be presented as of that date under the CTA prior to its modification by the MLI. Article 35(4) shall apply without regard to the taxable period to which the case relates.

  2. Early access to MAP by taxpayers

    As the Explanatory Statement to the MLI clarifies, paragraph 4 of Article 35 is intended to ensure that the provision of the MLI apply as soon as possible after the entry into force date, regardless of the taxable period to which a specific case shall apply. The exception as mentioned above is intended to ensure that the MLI would not "revive" cases that had been ineligible for MAP prior to the entry into force of the MLI.

    [5] Article 35(5): New CTA(s) resulting from an extension under Article 29(5) of the list of covered tax agreements under Article 2(1)(a)

  3. Extension of the list of CTAs [after the MLI came into force]

    Article 35(5) provides that the provisions of this Convention shall have effect in each Contracting Jurisdiction:

    with respect to taxes withheld at source on amounts paid or credited to non-residents, where the event giving rise to such taxes occurs on or after the first day of the next calendar year that begins on or after 30 days after the date of the communication by the Depositary of the notification of the extension of the list of agreements; and with respect to all other taxes levied by that Contracting Jurisdiction, for taxes levied with respect to taxable periods beginning on or after the expiration of a period of nine calendar months (or a shorter period, if all Contracting Jurisdictions notify the Depositary that they intend to apply such shorter period) from the date of the communication by the Depositary of the notification of the extension of the list of agreements. b) Provision providing for the asymmetric application of Article 35(1) and Article 35(5)

    Article 35(2) provides that "[s]olely for the purpose of its own application of subparagraph a) of paragraph 1 and subparagraph a) of paragraph 5, a Party may choose to substitute "taxable period" for "calendar year", and shall notify the Depositary accordingly.

    Article 35(3) provides that "[s]olely for the purpose of its own application of subparagraph b) of paragraph 1 and subparagraph b) of paragraph 5, a Party may choose to replace the reference to "taxable periods beginning on or after the expiration of a period" with a reference to "taxable periods beginning on or after 1 January of the next year beginning on or after the expiration of a period", and shall notify the Depositary accordingly."

    [6] Article 35(6): Reservation relating to the application of Article 35(4) to the Mutual Agreement Article

    Article 35(6) provides that a contracting jurisdiction may reserve the right for Article 35(4) not to apply to its CTAs.

    Where a contracting jurisdiction makes a reservation under Article 35(4), it chooses not to use the fast track to make a MAP request to the competent authority of either contracting jurisdiction. If so, the normal procedure under article 35(1) shall apply.

    [7] Article 35(7): Reservations relating to the application of Article 35(7)(a)(i) and (ii) to articles 35(1), (4), and (5)

    Article 35(7)(a) provides that a contracting jurisdiction may reserve the right to replace

    the references in paragraphs 1 and 4 to "the latest of the dates on which this Convention enters into force for each of the Contracting Jurisdictions to the Covered Tax Agreement"; and the references in paragraph 5 to "the date of the communication by the Depositary of the notification of the extension of the list of agreements"; with reference to "30 days after the date of receipt by the Depositary of the latest notification by each Contracting Jurisdiction making the reservation described in paragraph 7 of Article 35 (Entry into Effect) that it has completed its internal procedures for the entry into effect of the provisions of this Convention with respect to that specific Covered Tax Agreement".

    Table E1: Reservations that a contracting...

To continue reading

REQUEST YOUR TRIAL