Article 15 of MLI | Person Closely Related to an Enterprise


The phrase ‘person closely related to an enterprise’ plays a critical role in applying Article 12, Article 13, and Article 14 of MLI. Article 15 of MLI defines this phrase based on the text of Article 5(6)(b) of the OECD Model Tax Convention as set out on pages 16 and 17 of the Action 7 Report.

Person closely related an enterprise

Article 15(1) of MLI – Definition

For the Covered Tax Agreements that are modified by Article 12, Article 13, or Article 14, a person is closely related to the enterprise if :

  • Based on all facts and circumstances,
  • One has control of the other, or both are under the control of the same persons or enterprises; or
  • if one possesses directly or indirectly more than 50 percent of the beneficial interest in the other person or enterprise; or
  • in the case of a company, more than 50 percent of the aggregate vote and value of the company’s shares or the beneficial equity interest in the company.

Reservation Clause

Article 15(1) of MLI intends to apply to provisions of a Covered Tax Agreement that have been modified by a provision of the MLI that uses the term “ person closely related to an enterprise” (specifically Article 12(2), Article 13(4), and Article 14(1) of the MLI). Accordingly, countries can opt out of Article 15 only if they have made the reservations described in Article 12(4), Article 13(6)(a) or (c), and Article 14(3)(a).

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