SINGAPORE - Singapore is signing an international convention on Wednesday (June 7) that commits countries to implementing measures to clamp down on corporate tax avoidance.
Ms Sim Ann, the Senior Minister of State for Trade and Industry is signing the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting at a ceremony in Paris.
This convention comes at the conclusion of negotiations between more than 100 countries on a multilateral instrument that will swiftly implement a series of tax treaty measures to update international tax rules and reduce the opportunity for tax avoidance by multinational enterprises.
"Singapore continues to build on its commitment to the principle behind the Base Erosion and Profit Shifting (BEPS) project, which is that profits should be attributable to the jurisdiction where the substantial economic activities giving rise to the profits are conducted," the Ministry of Finance said in a statement on Wednesday.
The multilateral instrument seeks to facilitate the implementation of tax treaty-related measures to counter BEPS, a practice in which a company that has substantial economic activity in a high-tax jurisdiction instead books its profits in another jurisdiction with a low tax rate, but where it does not have substantial activity, just so it can pay less in taxes.
Signatories to the multilateral instrument can efficiently update their double taxation agreements (DTAs) to incorporate the updated measures without the need to renegotiate each DTA.
These measures include BEPS minimum standards on preventing treaty abuse and enhancing dispute resolution.