Malta on Tuesday ratified an important OECD tax convention aimed at closing gaps in international tax rules.

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) was deposited at the OECD together with the relevant list of reservations and notifications, following signature by Foreign Minister Carmelo Abela.

Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.

Under the inclusive framework, over 100 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS.

"The convention underlines the active role that Malta plays in the development and implementation of international standards in taxation, good governance, together with the government’s determination to effectively fight all types of abuse of tax systems," Mr Abela said.

The MLI closes the gaps in existing international tax rules by transposing results from the OECD/G20 BEPS Project into bilateral tax treaties worldwide.

The MLI will modify the application of thousands of bilateral tax treaties concluded to eliminate double taxation, and sets minimum standards to counter treaty abuse and to improve dispute resolution mechanisms, while providing flexibility to accommodate specific tax treaty policies.