Mazars Tax Update | Edition 15.20

MULTILATERAL INSTRUMENT (MLI) Impact on Indian Tax Treaties

The Multi-lateral instrument (‘MLI’) is one of the BEPS measures that India adopted. The introduction of the MLI has resulted in a paradigm shift in the way countries would now deal with taxing cross border transactions. As various counties including India sail their way into the implementation phase, there would be several aspects that would require deliberation and thinking at this stage.
MLI does not work like protocol amending the treaty but works alongside the existing treaty provisions either modifying them or replacing them. One would need to carefully examine the compatibility of the existing provisions of Treaty with the provisions of the MLI.
The MLI enters into force in countries on different dates, depending on when the instrument is ratified by one nation and its treaty partners. In India, the MLI came into effect in India on April 1, 2020 for the majority of the country’s covered tax agreements.
Through the enclosed document, we encapsulated the articles of MLI and India Position in respect of such Articles. We hope that it would be an informative read.