CROATIA and Malaysia have deposited their instrument of ratification for the world's main multilateral treaty against cross-border corporate tax avoidance, said the Organisation for Economic Cooperation and Development (OECD).

Two-thirds of the signatories of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) have not taken final action on the accord, with 63 of the 95 jurisdictions having ratified, accepted or approved it.

The MLI covers over 1,700 bilateral tax treaties and has already brought about the amendments of 650 treaties between the jurisdictions.

For Croatia and Malaysia, the MLI will enter into force on June 1, changing their current in-force tax treaties with other nations by adding provisions to curb tax avoidance by multinational groups.

An additional 1,200 treaties will become effectively modified once the MLI will have been ratified by all signatories, said the OECD.

The MLI had gone into effect on January 1, 2021. It offers concrete solutions for governments to close the gaps in existing international tax rules by transposing results from the 2015 OECD/G20 Base Erosion Profit Shifting (BEPS) Project into bilateral tax treaties worldwide.

The MLI modifies the application of thousands of bilateral tax treaties concluded to eliminate double taxation. It also implements agreed minimum standards to counter treaty abuse and to improve dispute resolution mechanisms while providing flexibility to accommodate specific tax treaty policies.