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Cover of Policy Paper 132
November 13, 2018

Should Developing Countries Sign the OECD Multilateral Instrument to Address Treaty-Related Base Erosion and Profit Shifting Measures?

The Multilateral Instrument (MLI) is a groundbreaking mechanism to update the network of thousands of bilateral tax treaties that make up the international tax system. This paper argues that developing countries should sign up to the MLI, but that they can afford to take a wait-and-see approach to selecting and finalizing options, while reviewing the options selected by other countries and building capacity for implementation. Developing countries should also be cautious about entering into new tax treaties to be sure that provisions are in their favour.