Hermeneutics of the MLI: interpretation rules and challenges for the implementation of BEPS measures in Peru

Abstract

In May 2025, Peru ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, which will modify the application of several tax treaties in order to implement the measures of the Base Erosion and Profit Shifting Project. However, the incorporation of this instrument raises particular interpretive challenges that require a differentiated analysis, as the Multilateral Convention does not operate as an amending protocol that alters the text of tax treaties, but rather applies alongside them, modifying their application. Among its most relevant particularities, the Multilateral Convention is drafted in English and French, contains interpretive cross-reference rules to the covered tax treaties, and establishes a Conference of the Parties as a mechanism for addressing matters of interpretation and implementation.

Accordingly, this article analyzes the rules of interpretation applicable to the Multilateral Convention in light of the Vienna Convention on the Law of Treaties, examining the relevance of the 2015 Base Erosion and Profit Shifting Reports and the 2017 Model Tax Convention of the Organisation for Economic Co-operation and Development; the role of the Explanatory Statement and the preamble as interpretive context; the cascading approach to interpretation set forth in Article 2(2) of the Multilateral Convention; the influence of the views of the Conference of the Parties; and the linguistic implications of tax treaties containing mixed content in Spanish and English or French. Likewise, the article examines the tax treaties that will be modified by the Multilateral Convention and when such modifications will take effect.