For tax on cross-border activities, companies can often rely on tax treaties with attractive tax rules and also tax advantages, which facilitate international business. However, this has changed as of 1 January 2020, due to the introduction of the multilateral instrument. From 1 January 2020, it is no longer sufficient to determine the applicable tax treaty between the two countries to establish which country may levy which income components to tax, in a given situation. The multilateral instrument (MLI), which also includes a principal purpose test (PPT), must also be consulted.
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