ICC Document & publication

ICC advises the UN on the Taxation of Hybrid Entities (2014)

Upon request from the United Nations Committee of Experts on International Cooperation in Tax Matters, ICC submitted its views on the taxation on hybrid entities to feed into the UN’s work on the UN Model Convention.

The letter highlights that the issues pertaining to hybrid entities are about double taxation as well as tax arbitrage. ICC acknowledges that tax arbitrage is an important part of the issue but stresses the importance for business that a balanced comprehensive approach is taken that accounts for the double taxation issues as well.

The letter calls upon the UN Committee to combine its work on Article 4 and Article 23 of the UN Model Convention (thereby combining source and residence perspectives) and, from a broader policy point of view, ICC advocates improvement of dispute resolution mechanisms to avoid double taxation issues.

Furthermore, ICC respectfully suggests the UN Committee to focus on both the inappropriate denial and granting of tax treaty benefits in situations involving hybrid entities and the different classification of certain payments in these situations, and, for now, to discard the issues of double taxation, double deduction and deduction/no inclusion under states’ domestic laws.

Lastly, ICC highlights that it would applaud increased synergy between the UN Committee and the work currently conducted by the OECD and encourages the UN Committee to feed the views of non-G20, non-OECD members into the OECD’s BEPS project.