A New Age of Multilateralism in International Taxation? ―Focusing on the G20/OECD BEPS Action 15(Multilateral Instrument)―

With the OECD/G20 BEPS project, the current international tax landscape is facing challenges and changes unprecedented for the past several decades. This paper looks at the development of bilateralism and multilateralism in the current international tax regime, takes stock of the BEPS works and analyzes the proposed Multilateral Instrument. Then, the paper discusses the emerging multilateral tax order in international taxation. Historically, bilateralism has been the constant trend of tax treaties, and later multilateral tax treaties have emerged in some regions. There being some deficiencies with bilateral treaties such as dilapidation, delay in entry into force and vulnerability to treaty shopping, the experience of multilateral tax treaties can help build a foundation for future development of a multilateral tax treaty to complement the bilateral tax treaty network. With a caveat that BEPS output is fluid at this stage, drawing on the various examples of existing non-tax multilateral treaties, the proposed Multilateral Instrument will be a desirable and feasible tool to reflect the necessary changes resulting from BEPS project. For Korea whose tax treaties need a systematic upgrade after a noticeable growth in quantity, the negotiation on the Multilateral Instrument of the BEPS project will be a great opportunity to revisit the existing bilateral tax treaties and to make appropriate amendments with bilateral treaty partners in a multilateral format. Beyond BEPS, supposing that the work on the Multilateral Instrument results in a multilateral convention, the inevitable question is the emergence of a multilateral tax order. In terms of feasibility of such a multilateral tax order, there are both positive and negative sides. The positive side is that the relative success of Global Forum on Tax Transparency can be a guidance on the post-BEPS multilateral tax order. On the other hand, the phenomenon of diminishing multilateral trade regime and prevalent bilateral investment treaty regime seem to be a negative evidence. Another point to consider is the appropriate forum to manage the multilateral tax order. For this, there are two competing organizations, i.e., the OECD CFA and UN tax committee, each of which having some limit to be developed into an intergovernmental forum. After all, the essential question will be how those major players such as the U.S., EU, China, India etc. could build a consensus by compromising on the institutional and substantive aspects of the multilateral tax order. For now, for the emerging multilateral tax order to proceed on a sound basis, the work of the BEPS project should bear substantive and meaningful fruits.