Full formLaw & Legal
MLIstands forMultilateral Instrument
Full Form of MLI
What is MLI?
The Multilateral Instrument (MLI) is an international treaty developed under the OECD/G20 Base Erosion and Profit Shifting (BEPS) project. It allows countries to swiftly modify their bilateral tax treaties to prevent tax avoidance and improve dispute resolution. India signed the MLI in June 2017 and ratified it in 2019, applying it to over 90 of its tax treaties. The instrument automatically updates covered tax agreements without requiring individual renegotiations, implementing BEPS minimum standards on treaty abuse, permanent establishment status, and mutual agreement procedures. In India, the MLI is used by tax authorities, multinational corporations, and chartered accountants to ensure compliance with global anti-avoidance norms. It is particularly significant for cross-border transactions and transfer pricing cases. For students preparing for UPSC, CA, or CS exams, understanding MLI is essential for questions on international taxation and India’s commitment to curbing tax evasion. The instrument aligns Indian tax policy with global best practices, strengthening the country’s position in the international tax framework.
MLI का फुल फॉर्म
बहुपक्षीय साधन
Example
The Income Tax Department issued a circular clarifying the application of the MLI to India's tax treaty with Singapore to prevent treaty shopping.
MLI — frequently asked questions
What is the full form of MLI?
The full form of MLI is the Multilateral Instrument, a global treaty to modify bilateral tax treaties and curb tax avoidance.
How does the MLI affect India's tax treaties with other countries?
The MLI automatically updates India's covered tax agreements to include anti-abuse provisions, such as the Principal Purpose Test, without requiring separate treaty renegotiations.
What is the relationship between MLI and BEPS?
MLI is a key outcome of the BEPS project, implementing several of its minimum standards to prevent base erosion and profit shifting by multinational enterprises.