We recommend the development and adoption of a public international law instrument to facilitate consistent implementation of the proposed Pillar Two measures, address the interaction of the GloBE rules with existing tax treaty obligations, and provide a legal basis for effective dispute prevention and resolution mechanisms. Therefore, we believe that it is essential that the implementation of Pillar Two specifically addresses the interaction of the GloBE rules with tax treaties to provide the certainty and stability that is needed. This could be done by amending existing treaty provisions or by concluding a new public law instrument that supersedes the relevant tax treaty provisions. As noted in the Blueprint, a new public international law instrument can also support the consistent implementation of the Pillar Two rules by jurisdictions that choose to adopt them and thus increase certainty for taxpayers. In addition to defining common terms and codifying key design elements of the rules, the instrument should also include dispute resolution mechanisms that ensure the consistent interpretation of its provisions. In addition, implementation must include the adoption of effective mechanisms for the elimination of double taxation. The risk of double taxation and controversy with respect to the Pillar Two rules and their potentially inconsistent implementation is significant. The statement in the Blueprint that the Convention on Mutual Administrative Assistance in Tax Matters is a tool that mitigates the risk of double taxation is not convincing. While that agreement allows for the exchange of tax information, it does not require tax administrations to align their interpretation of either facts or tax rules. It is this potential misalignment that will be a major source of controversy and dispute.
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Specifications of a multilateral convention For both Pillars a new multilateral convention is conceived as the most efficient way of implementing them given the need to coordinate results among multiple jurisdictions. The Blueprint on Pillar One points out that the implementation of rules for the determination of Amount A in an international public law instrument on tax would only strictly be necessary for those jurisdictions that have these restrictive bilateral tax treaties in force. On the other side, where there is no treaty, the rules could, at least in theory, be implemented purely under domestic legislation. However, the Blueprint recommends including in the multilateral convention implementation rules for the determination of all aspects of Amount A for all jurisdictions irrespective of tax treaties. This is just to ensure consistent coherent implementation of Amount A among jurisdictions. Content of the implementation should be all the essential elements of a new taxing right, consistent with the design of Amount A and domestic legislation. In this context consistency regarding the implementation is key. In contrast to the MLI concluded in scope of Action 15 of the first BEPS project it is therefore of utmost importance that a multilateral convention for Pillar One does not allow for any reservations by countries. Rather, the finally agreed set of rules need to be adopted by all jurisdictions in a consistent manner. As an overarching goal any controversy about Amount A and its allocation is to be avoided from the beginning. This is because such controversy would not be manageable for both tax administrations and taxpayers. Bilateral tax treaties would remain in force and continue to govern cross-border taxation outside Amount A. Therefore, the new multilateral convention will not be designed to change existing bilateral treaties but will coexist side by side. Its provisions would generally supersede only certain provisions of existing bilateral tax treaties where there was a potential conflict. Amending bilateral treaties alone would not be sufficient, as
