The Organisation for Economic Cooperation and Development (OECD) has finalised a standardised system to provide a simplified way for foreign portfolio investors to obtain the tax benefits of bilateral conventions to avoid double taxation.

The OECD's TRACE Implementation package is a set of agreements and forms to be used by any country that wants to implement the standardised Authorised Intermediary (AI) system for claiming withholding tax relief at source on portfolio investments.

According to the OECD, countries around the world have signed over 3,000 double tax treaties to facilitate cross-border portfolio investment, which it says amounts to around $35 trillion (£22 trillion).

However, the OECD says obtaining withholding tax relief is often difficult, time consuming and expensive.

The aim of AI is to streamline the administration involved and cut costs. Under this approach 'authorised intermediaries' can claim exemptions or reduced rates of withholding tax on behalf of clients who are portfolio investors.

Investors are able to indicate their entitlement to exemptions or reduced rates of withholding tax using a standardised investor self-declaration to the intermediary, without the need to procure a certificate of residence.

The TRACE group is now developing a plan for helping countries adopt the AI system. Work is also continuing to ensure that the reporting requirements under TRACE are aligned to those of other emerging reporting regimes (including FATCA and the Common Model for Residence Country Reporting) in order to reduce implementation costs for all stakeholders.

The TRACE report follows publication on 12 February of the latest OECD report on international corporation tax, commissioned by the G20.

The G20 report, Addressing Base Erosion and Profit Shifting (BEPS), found that multinationals are using strategies that allow them to pay as little as 5% in corporate taxes when smaller businesses are paying up to 30%. This report calls for an overhaul of international corporation tax rules.