The Isle of Man has ratified a new international treaty against tax avoidance by multinational firms.

The island became the second jurisdiction after Austria to deposit its instrument of ratification for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("Multilateral Instrument" or "MLI") with the OECD’s Secretary-General, Angel Gurría on October 25.

This follows its ratification by Tynwald on October 17.

The multilateral instrument means that new measures can be incorporated into thousands of tax treaties around the world, without the need for countries to undertake multiple bilateral negotiations.

The new treaty forms part of the OECD’s Base Erosion and Profit Shifting (BEPS) project.

BEPS refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits between jurisdictions in order to minimise tax liability.

The Isle of Man committed to meet the OECD’s BEPS standards in June 2016.

Treasury Minister Alfred Cannan MHK said: ’The Isle of Man takes a proactive approach to work with the international community on tax avoidance and has demonstrated this by becoming just the second country to ratify the new OECD treaty.

’Furthermore, we will continue to take our international responsibilities extremely seriously and in that respect the Isle of Man is not a jurisdiction that welcomes those seeking to evade or aggressively avoid taxes.’

The government is keen to show that the Isle of Man is a responsible jurisdiction.

The ratification comes at a time when the island is under more scrutiny for its tax affairs.

A Panorama investigation that will feature aircraft registration in the Isle of Man is to be shown on BBC1 on Sunday and Monday.