Vietnam joins multilateral convention on BEPS prevention

Goods loading at Hai Phong port (Photo: VNA)

Vietnam has officially become the 99th member of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).

Ambassador to France Dinh Toan Thang signed the convention on February 9 at the Organisation for Economic Co-operation and Development (OECD) headquarters in Paris.

The MLI, or Multilateral Instrument, covers over 1,800 bilateral tax agreements.

Addressing the signing ceremony, OECD Deputy Secretary General Yoshiki Takeuchi welcomed Vietnam, together with Thailand and Lesotho, to join the convention, raising the total signatories to 99.

Ambassador Thang affirmed that expanding tax base, preventing collection source erosion and profit shifting is a focus in Vietnam’s tax reform strategy.

Last year, the Prime Minister issued a decision approving a project to review the effectiveness of the agreements for the avoidance of double taxation, impacts to Vietnam’s tax policy space and adjustment direction, in which the signing of relevant international commitments like the MLI is defined as a priority, he said.

Ambassador to France Dinh Toan Thang signed the convention on February 9 at the Organisation for Economic Co-operation and Development (OECD) headquarters in Paris. (Photo: VNA)

The diplomat highlighted the significance of the MLI joining as Vietnam has become the co-chair of the OECD’s Southeast Asia Regional Programme for 2022-2025.

He expressed belief that the implementation of the MLI will help further promote the partnership between Vietnam and the OECD and specify the memorandum of understanding on strengthening cooperation between the two sides that was signed by Prime Minister Pham Minh Chinh and OECD Secretary General Mathias Cormann in Paris in last November in Paris.

Over the years, the OECD has been an important partner of Vietnam with the provision of policy consultations and support in various fields. So far, Vietnam has joined seven legal tools of the OECD.

The MLI was formed following the initiative of the OECD and G20 countries on the formation of a project on base erosion and profit shifting (BEPS) prevention.

The MLI helps synchronise and promote the effectiveness of nearly 3,000 bilateral tax agreements of member countries and territories.

According to the OECD, BEPS practices cost the sides 100-240 billion USD in lost revenue annually, which is the equivalent to 4-10% of the global corporate income tax revenue./.