ICC Document & publication

ICC comments on the OECD Discussion Draft on Preventing Treaty Abuse (2014)

ICC submitted high level and fundamental comments on the OECD’s Discussion Draft on Action 6, concerning Treaty Abuse, of the OECD Base Erosion and Profit Shifting (BEPS) Action Plan.

ICC submitted high level and fundamental comments to the OECD’s Discussion Drafts on Action 6 of the OECD Base Erosion and Profit Shifting (BEPS) Action Plan.

BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to make profits ‘disappear’ for tax purposes and/or to shift profits to locations where there is little or no real activity but the taxes are low resulting in little or no overall corporate tax being paid.

OECD’s BEPS Action 6 is intended to develop model treaty provisions and recommendations regarding the design of domestic rules to prevent the granting of treaty benefits in inappropriate circumstances. It also calls for a clarification that tax treaties are not intended to be used to generate double non-taxation and to identify the tax policy considerations that, in general, countries should consider before deciding to enter into a tax treaty with another country.

The OECD discussion draft, Preventing the granting of treaty benefits in inappropriate circumstances, includes the preliminary results of the work carried out in the three different areas identified in Action 6:

1.) Develop model treaty provisions and recommendations regarding the design of domestic rules to prevent the granting of treaty benefits in inappropriate circumstances (which include specific anti-abuse provisions as well as general purpose test).

2.) Clarify that tax treaties are not intended to be used to generate double non-taxation.

3.) Identify the tax policy considerations that, in general, countries should consider before deciding to enter into a tax treaty with another country.