THE OECD MULTILATERAL INSTRUMENT

NEW MOMENTUM IN THE INTERNATIONAL TAX LAW AND ITS IMPACT ON THE MACEDONIAN TAX LAW

Abstract

In the last decade, the international tax landscape, characterized by the interaction of more than
200 tax systems, limitation of countries` tax sovereign only in the national borders and difference
in tax rules interpretation, has created numerous possibilities for taxpayers to maximize their
income, capital and/or profit and minimize the tax they paid. These opportunities are much more
available for large multinational companies that have a network of branches and subsidies
worldwide. As a result of base erosion and profit shifting schemes, the outcome is a violation of
the principle of taxation, problems in the functioning of tax systems and, at last but not at least,
enormous loss of potential tax revenues. Countries and international organizations have
recognized the importance of the problem and engaged in establishing standards to prevent tax
evasion and tax avoidance. The BEPS Package is a symbol of these efforts, while the
Multilateral Instruments, as Action 15 of this BEPS Inclusive Framework, only strengthens the
countries` determination to combat tax evasion and tax avoidance by preventing abuse of
bilateral tax treaties on elimination of double taxation on income and capital and introducing
minimum standards. Surely, the Multilateral Instrument has changed the perspectives of the
international tax law giving the countries a chance to amend their bilateral tax treaties without
renegotiations which require time, finances and experts. The Republic of North Macedonia
signed the MLI in January 2020 and the next step is its ratification. Although our country has a
lot to do in the area of corporate taxation, signing MLI only confirms Macedonian endeavour to
provide its assistance and to participate in the world`s fight against tax evasion and tax
avoidance.