Bulgaria starts applying the Multilateral Convention
As of 1 January 2023 the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“BEPS Convention”, "Multilateral Instrument" or "MLI") enters into force in Bulgaria and will swiftly implement a series of tax treaty measures to update international tax rules and reduce the opportunity for tax avoidance by multinational enterprises.
Among other important aspects, the MLI will have an effect on the application of double taxation avoidance treaties. “The conclusion of this multilateral instrument marks a new turning point in tax treaty history. In addition to saving competent authorities from the burden of bilaterally renegotiating these treaties, the MLI leads to more certainty and predictability for businesses, and a better functioning international tax system for the benefit of our citizens.”, says Angel Gurría, Secretary-General of the Organization for Economic Co-operation and Development (“OECD”).
Signatories and parties that joined the MLI identified which of their existing double taxation avoidance treaties they wish to modify via the MLI and which of its provisions they wish to implement. Their choices (made through notifications and reservations) are reflected in their “MLI Position”.
Once a tax treaty has been listed by its two treaty partners, it becomes an agreement covered by the MLI. The effects of the MLI on a specific covered agreement are drawn from the “matching” of its partners’ choices.
At present, Bulgaria has concluded double taxation avoidance treaties with 71 countries and has included 66 of them it its “MLI Position”. Bulgaria’s “MLI Position”, which provides further details, and can be found on the OECD website.
