Objectives & Agenda : The Multilateral Instrument (MLI) is the latest development in International taxation which would modify the existing bilateral treaties (DTAAs) and implement measures to prevent Base Erosion Profit Shifting (BEPS) strategies. MLI is a flexible instrument which will modify tax treaties according to a jurisdiction’s policy preferences by providing Alternate provisions, optional provisions and right for reservation. In this webinar, we will analyse the MLI Positions of India and 3 other countries and understand the effect of MLI on the tax treaties between the Countries. The 3 countries considered for analysis in this Webinar are Japan, Singapore and the United Kingdom (UK).

1. MLI Comparative Analysis - Japan,
Singapore and United Kingdom
CA Divakar Vijayasarathy

2. Credits and Acknowledgments
V Thirumal
CA Jugal Gala

3. Legends used in the Presentation
CA Competent Authority
CTA Covered Tax Agreement
LOB Limitation on Benefits
MAP Mutual Agreement Procedure
MHP Minimum Holding Period
MLI Multilateral Instrument
OECD Organisation for Economic Cooperation and Development
PE Permanent Establishment
PPT Principle Purpose Test
UK United Kingdom

4. Presentation Schema
Introduction Flexibility Applicability of MLI Hybrid Mismatches
Prevention of Treaty
Abuse
Avoidance of PE
Status
Dispute Resolutions Arbitration
Final Provisions

5. Applicability of MLI • Article 34 – Entry into Force
• Article 2 – Interpretation of Terms – Covered Tax Agreement
Hybrid Mismatches • Article 3 - Transparent Entities
• Article 4 - Dual Resident Entities
• Article 5 - Application of Methods for Elimination of Double Taxation
• Article 6 - Purpose of a Covered Tax Agreement
Prevention of Treaty
Abuse
• Article 7 - Prevention of Treaty Abuse
• Article 8 - Dividend Transfer Transactions
• Article 9 - Capital Gains from Alienation of Shares or Interests of Entities Deriving their Value Principally
from Immovable Property
• Article 10 - Anti-abuse Rule for Permanent Establishments Situated in Third Jurisdictions
• Article 11 - Application of Tax Agreements to Restrict a Party’s Right to Tax its Own Residents
Avoidance of Permanent
Establishment Status
• Article 12 - Artificial Avoidance of Permanent Establishment Status through Commissionnaire Arrangements
and Similar Strategies
• Article 13 - Artificial Avoidance of Permanent Establishment Status through the Specific Activity Exemptions
• Article 14 - Splitting-up of Contracts
• Article 15 - Definition of a Person Closely Related to an Enterprise
Dispute Resolution • Article 16 - Mutual Agreement Procedure
• Article 17 - Corresponding Adjustments
Arbitration Article 18 - Choice to Apply Arbitration
Final Provisions Article 35 - Entry into Effect
Articles Covered

6. Introduction
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI)
The MLI consists of 39 articles categorized into 7 major parts namely:
Scope and Interpretation of Terms
Hybrid Mismatches
Treaty Abuse
Avoidance of Permanent Establishment Status
Improving Dispute Resolution
Arbitration
Final Provisions
Lessen Tax Avoidance - Will
swiftly implement a series of
tax treaty measures to update
international tax rules and
lessen the opportunity for tax
avoidance by MNEs
Number of Jurisdictions - 90
Jurisdictions are signatories to
the MLI and 6 Jurisdictions
have expressed their intent to
sign the Convention
Ratification - Each signatory is
required to ratify the MLI in
their own jurisdictions and
deposit the instrument of
ratification with the OECD
Depository
Alongside Application - MLI
will not amend the existing
treaties, instead it will apply
alongside the existing treaties
and modify its application

7. Flexibility
Alternate Provisions Optional Provisions
MLI is a flexible instrument which will modify tax treaties according to a jurisdiction’s policy preferences
Jurisdictions can choose amongst
alternate provisions in certain articles
Reservation
Jurisdictions can choose to apply
provisions which are optional
Jurisdictions may choose to reserve their
right not to apply certain MLI provisions
However, jurisdictions do not have the option to opt out of provisions which reflect
treaty related Minimum standards agreed to as part of the BEPS Package
Prevention of Treaty abuse (BEPS Action 6) Improvement of dispute resolution (BEPS Action 14)
MLI Position
refers to the document
which lists out:
• The agreements covered under the convention
• Choices of alternate provisions and optional provisions
• Reservations made not to apply certain provisions
• Provision in bilateral instruments which are impacted by the MLI
• Every jurisdiction is required to provide its Provisional MLI Position while signing the MLI
• Final MLI Position is to be deposited with the OECD Depository along with the instrument of
ratification of MLI in the jurisdiction

8. Applicability of MLI
Particulars India Japan Singapore UK
Date of Signature 7th June 2017 7th June 2017 7th June 2017 7th June 2017
Date of Deposit of Ratification
Instrument and Final MLI Position
25th June 2019 26th September 2018 21st December 2018 29th June 2018
Date of Entry into Force
(Article 34)
1st October 2019 1st January 2019 1st April 2019 1st October 2018
Article 34 – MLI shall enter into force on the 1st day of the month following the expiration of 3 months beginning on the date of the deposit of
ratification
Covered Tax
Agreement
(CTA)
(Article 2)
Whether India has
been notified
- Yes Yes Yes
Whether India has
notified the other
country
- Yes Yes Yes
Whether CTA? - Yes Yes Yes

9. Hybrid Mismatches

10. Article 3 - Transparent Entities
Particulars India Japan Singapore UK
Positions
Reserves right for entirety
of article not to apply
Reserves right for Para
2 not to apply to CTAs
Reserves right for entirety
of article not to apply
Reserves right for entirety
of article not to apply
Effect on CTA - Article 3 does not apply Article 3 does not apply Article 3 does not apply
but only to the extent that the income is
treated as income of a resident of that
Contracting Jurisdiction for tax purposes
shall be considered to be
income of a Resident of a
Contracting Jurisdiction
Income derived by or through FTE
(Fiscally Transparent Entity) under
the tax law of either Jurisdiction
Para 1
Provisions of CTA that require a country of residence
to provide exemption or credit of income tax on
income which may be taxed in the other state
shall not apply to the extent that such provisions allow
taxation by other state solely because the income is
also income derived by a resident of that other state
Para 2
Rationale: Treaty benefits will be available to FTEs where it is expressly provided by the treaty. India intends to retain
independency to determine treatment of FTEs through bilateral negotiations

11. Article 4 – Dual Resident Entities
Particulars India Japan Singapore UK
Positions No Reservation
No Reservation subject to replacing last
sentence “agree to provide relief in other
specified manner” with “In the absence of
any agreement entity shall not be entitled
for any relief”
Reserves right for
entirety of article
4 not to apply
No Reservation
Notified
Provisions of
CTA
Japan - Article
4(2) of CTA
UK - Article
4(3) of CTA
India – Article 4(2) of CTA - India - Article 4(3) of CTA
Effect on CTA -
• Article 4(2) of India-Japan DTAA shall be
replaced by para 1 of Article 4 of MLI
• Last sentence of para 1 of article would
be replaced with given sentence
Article 4 does not
apply
Article 4(3) of India-UK DTAA
shall be replaced by para 1 of
article 4 of MLI
Implications -
• Where an entity is considered resident
in 2 jurisdictions as per CTA provisions,
competent authorities to mutually
determine the residence (Para 1)
• In the absence of any agreement entity
shall not be entitled for any relief
-
Where an entity is considered
resident in 2 jurisdictions as per
CTA provisions, competent
authorities to mutually
determine the residence status
or agree to provide relief in
other specified manner

12. Article 5 - Methods for Elimination of Double Taxation
Particulars India Japan Singapore UK
Positions
Choice to apply Option C
(Credit method for all
incomes)
None of the Options
chosen
Reserves right for
entirety of Article 5 not
to apply
None of the Options
chosen
Effect on CTA -
Option Chosen by India
would not apply
Article 5 would not apply
Option chosen by India
would not apply
Implications -
Option C will apply to
Indian residents
-
Option C will apply to
Indian residents
Option A Credit method instead of exemption method for any income that is exempt
or taxed at a reduced tax rate by other state pursuant to CTA
Option B Credit method instead of exemption method for dividends that are
deductible for payer in other state
Option C Credit method for all income that may be taxed in other state

13. Prevention of Treaty Abuse

14. Article 6 - Purpose of a Covered Tax Agreement
Particulars India Japan Singapore UK
Positions
No
reservat
ions
• Para 1 of Article 6 not to apply
to CTA that already contain the
prescribed preamble text
• Choses to apply optional
additional preamble text
• Choses to apply optional
additional preamble text
• Para 1 of Article 6 not to apply
to CTA that already contain the
prescribed preamble text
• Choses to apply optional
additional preamble text
Notified
Provisions of
CTA
-
• Already contains prescribed
preamble text – India
• Does not contain additional
preamble text – India
• Already contains prescribed
preamble text – India
• Does not contain additional
preamble text – India
• Already contains prescribed
preamble text – India
• Does not contain additional
preamble text – India
Effect on
CTA
-
• Article 6 applies
• optional additional preamble
text will not apply
• Article 6 applies
• optional additional preamble
text will not apply
• Article 6 applies
• optional additional preamble
text will not apply
Implications
Para I - Prescribed Preamble text would be added to existing preamble in CTAs (would get added even if notification is
made by one country):
“Intending to eliminate double taxation with respect to the taxes covered by this agreement without creating opportunities
for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements
aimed at obtaining reliefs provided in this agreement for the indirect benefit of residents of third jurisdictions)”
Optional Additional text (only if both the jurisdictions opt) - “Desiring to further develop their economic relationship and to enhance
their co-operation in tax matters,”

15. Article 7 - Prevention of Treaty Abuse
Particulars India Japan Singapore UK
Positions
• Accepts PPT as an interim
measure and Intends to
adopt LOB provision
through bilateral
negotiation
• Choses to apply simplified
LOB provision
No Reservations
Choses to apply
optional provision in
para 4
(reconsideration of
cases rejected on
account of PPT)
Choses to apply optional provision in para 4
(reconsideration of cases rejected on account of
PPT)
Notified
Provisions
of CTA
Provisions that contain PPT
• UK – Article 28C of CTA
Provision that contain LOB
• Japan and Singapore not
notified
Provisions that
contain PPT
• India not
notified
Provisions that contain
PPT
• India not notified
Provisions that contain PPT
• India - Articles 11(6), 12(11), 13(9) and 28C
of CTA
Effect on
CTA
-
• PPT will apply as interim measure
• PPT shall supersede CTA provisions to the
extent of incompatibility (notification
mismatch)
• SLOB will not apply (as both have to
choose)
• Optional provision in para 4 will not apply
• Article 28C of CTA will be replaced
• PPT will apply as interim measure
• PPT shall supersede CTA provisions to the
extent of incompatibility (notification
mismatch)
• SLOB will not apply (as both have to choose)
• Optional provision in para 4 will not apply
(as both have to choose)
Notification mismatch – One country notifying the provisions of CTA and other country does not notify

16. Article 8 - Dividend Transfer Transactions
Particulars India Japan Singapore UK
Positions
Reserves right for article 8 not to
apply to CTA that already contain
MHP longer than 365 days
Reserves right for
entirety of article 8 not
to apply
Reserves right for
entirety of article 8 not
to apply
Reserves right for
entirety of article 8 not
to apply
Notified
Provisions of
CTA
CTA provision containing threshold
Singapore - Article 10(2)(a)
- - -
Effect on CTA - Article 8 will not apply Article 8 will not apply Article 8 will not apply
MHP – Minimum holding period – for which any threshold relating to ownership or control in a company is to be maintained

17. Article 9 - Capital Gains from Alienation of Shares or Interests of
Entities Deriving their Value Principally from Immovable Property
Particulars India Japan Singapore UK
Positions
Chooses to apply para 4 of
article 9
Chooses to apply para 4 of
article 9
Reserves the right not to
apply article 9
Reserves the right not to
apply article 9
Notified
Provisions of
CTA
CTA provision that contain
threshold
• Japan, Singapore and UK
not notified
CTA provision that contain
threshold
• India not notified
- -
Effect on CTA -
• Para 4 of article 9 will
apply
• Shall supersede the
provision of CTA to the
extent of incompatibility
(notification mismatch)
Article 9 will not apply Article 9 will not apply
Para 4 of Article 9 – Capital Gains on shares or comparable interest shall be taxable in the jurisdiction in which the
immovable property is situated at any time during the 365 days prior to transfer the shares or interests, which derives
more than 50% of value (threshold) from Immovable Property

18. Article 10 - Anti-abuse Rule for PEs Situated in Third Jurisdictions
Particulars India Japan Singapore UK
Positions
No
Reserva
tion
No Reservation
Reserves the right
for entirety of
Article 10 not to
apply to CTAs
Reserves the right for
entirety of Article 10
not to apply to CTAs
Notified
Provisions of
CTA
- No
notificat
ion
made
- No notification made
Effect on CTA -
• Article 10 would apply
• Shall supersede CTA provisions to the extent of incompatibility
(because of non-notification) (non-notification – where none of
the countries notify provisions even in case of no reservations)
Article 10 would not
apply
Article 10 would not
apply
Implications -
• Where a Company in Country of Residence earns income from
Country of Source and Such income is attributable to PE
established in a 3rd jurisdiction and
• Such income is exempt from tax in country of residence, then
• Treaty benefits would be denied if tax rate in PE country is less
than 60% of tax rate in country of Residence
• Income would be taxable in the Country of Source notwithstanding
other provisions
- -

19. Article 11 - Application of Tax Agreements to Restrict a Party’s
Right to Tax its Own Residents
Particulars India Japan Singapore UK
Positions
No
Reser
vation
Reserves the right for
the entirety of Article 11
not to apply to CTAs
Reserves the right for the
entirety of Article 11 not
to apply to CTAs
No reservation
Notified
Provisions of
CTA
No
notific
ation
made
- -
CTA provision stating that it would not
affect the taxation of own Residents
• India not notified
Effect on CTA -
Article 11 would not
apply
Article 11 would not apply
• Article 11 would apply
• Shall supersede the provisions of
CTA to the extent of incompatibility
(because of notification mismatch)
Implications - - -
CTA provisions would not affect a
jurisdiction’s right to tax its own
residents except in specified
circumstances - Para 1 (Savings clause)

20. Avoidance of PE Status

21. Article 12 - Artificial Avoidance of PE Status through
Commissionnaire Arrangements and Similar Strategies
Particulars India Japan Singapore UK
Positions No reservation No reservation
Reserves the right
for the entirety of
Article 12 not to
apply to CTAs
Reserves the right
for the entirety of
Article 12 not to
apply to CTAs
Notified
Provisions
of CTA
CTA provision which deems
agents as PE
• Japan – Article 5(7)(a)
• Singapore – Article 5(8)(a)
• UK – Article5(4)(a)
CTA provision which exempts
independent agents
• Japan – Article 5(8)
• Singapore – Article 5(9)
• UK – Article 5(5)
CTA provision which deems agents as PE
• India – Article 5(7)(a)
CTA provision which exempts
independent agents
• India – Article 5(8)
- -
Effect on
CTA
-
• Article 12 would apply
• Para 1 would replace Article 5(7)(a)
• Para 2 would replace Article 5(8)
Article 12 would not
apply
Article 12 would not
apply
• Para 1 – Deems an agent who exclusively works for an entity as its PE
• Para 2 – Exempts independent agents in normal course of business from Para 1

22. Article 13 - Artificial Avoidance of PE Status through the Specific
Activity Exemptions
Particulars India Japan Singapore UK
Positions
• Chooses to apply Option
A
• No reservation against
‘anti-fragmentation rule’
• Chooses to Apply
Option A
• No reservation against
‘anti-fragmentation
rule’
• Reserves the right for
‘Anti-fragmentation rule’
not to apply to its CTAs
• Chooses to apply Option B
No Reservation or Choice
made
Notified
Provisions
of CTA
CTA provision which contains
Specific Activity Exemptions
from PE definition
• Japan – Article 5(6)
• Singapore – Article 5(7)
• UK – Article 5(3)
CTA provision which
contains Specific Activity
Exemptions from PE
definition
• India – Article 5(6)
CTA provision which contains
Specific Activity Exemptions
from PE definition
• India – Article 5(7)
CTA provision which contains
Specific Activity Exemptions
from PE definition
• India – Article 5(3)
Effect on
CTA
-
• Option A (Para 2) shall
apply in relevant parts
of Article 5(6) of CTA
• Anti-fragmentation
rule would apply to
Article 5(6) of CTA
• Anti Fragmentation Rule
will not apply
• Neither Option would
apply
• Anti-fragmentation rule
would apply to Article
5(3) of CTA
• Neither Options would
apply
Option A – Any specific activity exemption or any
place would not be deemed to be PE only if the
activity is of preparatory or auxiliary character
Option B – Any specific activity exemption or any place would not be deemed to be
PE only if the activity is of preparatory or auxiliary character
Exception where provision explicitly states that an activity is deemed not to be PE

23. Article 14 - Splitting-up of Contracts
Particulars India Japan Singapore UK
Positions No Reservation
Reserves the right for the
entirety of Article 14 not to
apply to CTAs
Reserves the right for the
entirety of Article 14 not to
apply to CTAs
Reserves the right for the
entirety of Article 14 not to
apply to CTAs
Effect on CTA - Article 14 would not apply
Particulars India Japan Singapore UK
Positions No Reservation No Reservation
Reserves the right for the
entirety of Article 15 not to
apply to CTAs
No Reservation
Effect on CTA - Article 15 would apply Article 15 would not apply Article 15 would apply
Article 15 - Definition of a Person Closely Related to an Enterprise
Article 14 - For calculating duration for determination of PE Status, different periods of work carried out in a construction site are
to be added to the aggregate

24. Dispute Resolution

25. Article 16 - Mutual Agreement Procedure
First sentence of Para 1 Any action of competent authorities not in accordance with CTA – Person may present a case to
any one of the Competent Authorities (CA) of the Jurisdictions
Second sentence of Para 1 Case must be presented within 3 years from the first notification of such action
First sentence of Para 2 The CA shall endeavour to resolve the case by mutual agreement with the other CA
- if the objection appears to it to be justified and
- if it is not itself able to arrive at a satisfactory solution
Second sentence of Para 2 Implementation notwithstanding any time limits in the domestic laws
First sentence of Para 3 The CAs shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to
the interpretation or application of the CTA
Second sentence of Para 3 Consult together for the elimination of double taxation in cases not provided for in the CTA
Particulars India Japan Singapore UK
Positions
• First Sentence of Para 1 not to apply on
the basis that it intends to meet the
minimum standard for improving dispute
resolution under the OECD/G20 BEPS
Package,
• by accepting cases in Resident country
and initiating bilateral consultation
process
No
Reservation
• First Sentence of Para 1 not to apply on
the basis that it intends to meet the
minimum standard for improving
dispute resolution under the OECD/G20
BEPS Package
• by accepting cases in Resident country
and initiating bilateral consultation
process
No
Reservation

26. Notified Provisions in CTA
Particulars India Japan Singapore UK
Notification
of
Provisions of
CTA
pursuant to
article of
MLI:
16(6)(a) (contains 1st sentence of Para 1) NA
India - Article 25(1),
first sentence of CTA
NA
India -
Article
27(1)
16(6)(b)(i) (does not contains 2nd
sentence of Para 1)
- - - -
16(6)(b)(ii) (already contains 2nd
sentence of Para 1) (this is the only
clause which says where any one party
has notified, the sentence will not
apply)
Japan - Article 25(1),
Second Sentence of CTA
Singapore - Article 27(1),
Second Sentence of CTA
India - Article 25(1),
second sentence of CTA
India - Article
27(1), Second
Sentence of CTA
-
16(6)(c)(i) (contains 1st sentence of Para
2)
- - - -
16(6)(c)(ii) (contains 2nd sentence of
Para 2)
United Kingdom - - India
16(6)(d)(i) (contains 1st sentence of Para
3)
- - - -
16(6)(d)(ii) (contains 2nd sentence of
Para 3)
United Kingdom - - India

27. Effect and Implications
Japan Though Article 16 does not apply, CTA already contains similar MAP provisions
Singapore Though Article 16 does not apply, CTA already contains similar MAP provisions
United Kingdom
Other MAP provisions already exist
Added by MLI:
- 3 years time limit for submission of cases
- Agreement to be implemented notwithstanding any time limit in domestic laws
- Consult together for the elimination of double taxation in cases not provided for in the CTA
Japan Singapore UK
Effect
on
CTA
All
sentences
do not apply
(because of
non-
notification)
All
sentences
do not apply
(because of
non-
notification)
First sentence of Para 1 would not apply
Second sentence of Para 1 will apply and supersede to the extent of incompatibility
First sentence of Para 2 would not apply (because of non-notification)
Second sentence of Para 2 will apply
First sentence of Article Para 3 would not apply (because of non-notification)
Second sentence of Article Para 3 will apply

28. Article 17 – Corresponding Adjustments
Particulars India Japan Singapore UK
Positions
Reserves right not to apply
to CTAs that already contain
provision for corresponding
adjustments
No Reservations No Reservations No Reservations
Notified
Provisions
of CTA
CTA provision which
provides for corresponding
adjustments:
• Singapore – Article 9(2)
• United Kingdom –
Article 10(2)
• Japan not notified
CTA provision which
provides for corresponding
adjustments:
• India – Article 9(2)
CTA provision which
provides for corresponding
adjustments:
• India – Article 9(2)
CTA provision which
provides for corresponding
adjustments:
• United Kingdom –
Article 10(2)
Effect on
CTA
-
• Article 17 would apply
• Shall supersede CTA
provisions to the extent
of incompatibility
(because of notification
mismatch)
Article 17 would not apply Article 17 would not apply
Article 17 – Where one jurisdiction makes a primary adjustment to the profits of an enterprise the
other jurisdiction has to make corresponding adjustment to the profits of the associated entity

29. Arbitration and Final Provisions

30. Article 18 – Choice to Apply Part VI - Arbitration
Particulars India Japan Singapore UK
Positions
India has not opted to
apply Part VI of MLI
Chooses to apply Part VI Chooses to apply Part VI Chooses to apply Part VI
Effect on CTA -
Part VI of MLI will not
apply
Part VI of MLI will not
apply
Part VI of MLI will not
apply
Implications Unresolved MAP issues cannot be submitted to Arbitration
Article 19 to 26 of Part VI has not been discussed further as India has not opt for Part VI

31. Article 35 – Entry into Effect
Entry into Effect
With respect to taxes withheld at source on
amounts paid or credited to non-residents where
event giving rise to such taxes occurs on or after
1st April 2020 1st January 2020 1st January 2020 1st January 2020
With respect to all other taxes levied, taxes levied
with respect to taxable periods beginning on or
after*
1st April 2020 1st April 2020 1st April 2020 1st April 2020
Particulars India Japan Singapore UK
Date of Entry into Force (Article 34) 1st October 2019 1st January 2019 1st April 2019 1st October 2018
With respect to taxes withheld at source
for non-residents
Event occurring on or after 1st January of the next calendar year that begins on or after
latest of the dates on which MLI enters into force for each of the jurisdictions to CTA
• Optional provision to replace ‘calendar year’ with ‘taxable period’
• India has chosen to apply the optional provision
• Japan, Singapore and UK has not chosen the optional provision
With respect to all other taxes levied Taxable periods on or after expiration of 6 months from the latest of the dates on which
MLI enters into force for each of the jurisdictions to CTA
* For e.g. The taxable period for Singapore is from January to December, the taxable period starting from 01.01.2021 shall get covered
Article 27 to 33 & 36 to 39 of Part VII – Final Provisions has not been discussed as are procedural and does not require comparative analysis

32. Thank You
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