which is the OECD approach proposed in BEPS Action 6. third country resident to invoke a tax treaty benefit, contained in articles 10, 11 and 12 of the tier of the ownership test, that is, even if the ownership test is met, the ta

1. See EY Global Tax Alert, OECD releases final report on countering harmful tax practices under Action 5, dated 8 October 2015. 2. See EY Global Tax Alert, OECD releases peer review documents on BEPS Action 5 on Harmful Tax Practices and on BEPS Action 13 on Country-by-Country Reporting, dated 6 February 2017. 3. See EY Global Tax Alert, OECD releases progress report on preferential regimes

In October 2015, the G20 Finance Ministers endorsed the BEPS Package, which includes the report on Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances (“the Report on Action 6” or “the Report”, OECD (2015)). BEPS Action 6: Preventing the granting of treaty benefits in inappropriate circumstances On 16 September 2014, ahead of the G20 Finance Ministers’ meeting on 20-21 September, the OECD published seven papers as a first tranche of deliverables under the Base Erosion and Profit Shifting (‘BEPS’) Project. The Action 6 of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project identifies treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns. Taxpayers engaged in treaty shopping and other treaty abuse strategies undermine tax 1.1 Action 6: ‘minimum standard’ against treaty shopping The base erosion and profit shifting (‘BEPS’) initiative was launched on July 19, 2013, when the Organization for Economic Cooperation and Development (‘OECD’) presented Action Plan on BEPS1 endorsed by G20 The OECD final report on action 6 recommends a three-pronged approach to address treaty shopping:3 1) a clear statement in the title and preamble of a DTA that the contracting parties intend to avoid creating opportunities for nontaxation or reduced taxation through tax evasion or avoidance; 2017-03-09 · BEPS Action Point 6: Prevent treaty abuse. The goal of Action 6 is to prevent the granting of treaty benefits in inappropriate circumstances. It needs to be made clear that tax treaties are not intended to be used to generate double non-taxation. In addition, countries should consider this before entering into a tax treaty with another country.

Beps action 6 three-pronged approach

The Action Plan identifies treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns. Action 6 The OECD proposal provides a three-pronged approach: Treaty statement re: anti-avoidance rule and treaty shopping opportunities; Specific anti-abuse rule based on Limitation of Benefit Action 6 of the OECD/G20 BEPS Project[6] identifies treaty abuse (with a particular focus on treaty shopping) as a BEPS concern. This Action has produced multiple alternatives to afford Contracting States flexibility but at the same time ensuring that the common goal of implementing safeguards within the treaty against treaty abuse is achieved. 2014-12-26 United Kingdom: BEPS Actions implementation Last updated: May 2017 More information on the Global Tax Reset & BEPS >>> Back to BEPS Actions >>> Interest deductions (Action 4) Common approach Following public consultation, draft legislation restricting corporate interest tax deductibility was issued in … group action is more complex and takes time to work out. Such is the case with the OECD’s approach to non-collective investment vehicle funds (non-CIV funds) and their interaction with the BEPS Action 6 on preventing the granting of treaty benefits in inappropriate circumstances. Action 6 refresher Action 6 – Preventing the granting of treaty benefits in inappropriate circumstances Introduction On 5 October 2015, the Organisation for Economic Co - operation and Development (OECD) released final reports in connection with all its 15 Action Plans on Base Erosion and Profit Shifting (BEPS). The BEPS Action 6 Action to fight corporate tax avoidance has been deemed necessary in the OECD forum has and received further impetus through the G20/OECD Base e rosion and p rofit shifting action plan (known as BEPS).

A combined three-pronged approach of recommended changes to the Title and Preamble to the tax treaty, a PPT rule and an LOB provision. The Action Plan identifies treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns. Action 6 The OECD proposal provides a three-pronged approach: Treaty statement re: anti-avoidance rule and treaty shopping opportunities; Specific anti-abuse rule based on Limitation of Benefit Action 6 of the OECD/G20 BEPS Project[6] identifies treaty abuse (with a particular focus on treaty shopping) as a BEPS concern.

All rights reserved. 25 OECD – BEPS 2014 Preventing the granting of treaty benefits in inappropriate circumstances Treaty abuse and treaty shopping identified as one of the most important sources of BEPS concerns Three pronged approach recommended to address treaty abuse and shopping arrangements Design rules to prevent granting of treaty benefits in inappropriate circumstances Tax treaties not intended to be used to generate double non-taxation Identification of tax policy consideration

The MLI also implements the BEPS Action 6 minimum standard by implementing a principal purpose test (PPT). Under the PPT rule, a tax treaty benefit is denied where one of the principal purposes of an arrangement or transaction is to directly or indirectly obtain the benefit, unless the granting of that benefit in the circumstances would be in accordance with the object and purpose of the beps action plans that are a priority in africa cont. Action Plan 6: Prevent Treaty Abuse Entails “treaty shopping” - use of DTT by the residents of non-treaty country to obtain treaty benefits Actions 8 to 10 of the BEPS Action Plan aim to reinforce this principle by ensuring that the allocation of profits is correctly aligned with the economic activity that produced the profits.

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See EY Global Tax Alert, OECD releases first annual peer review report (Phase 1) on Action 13, dated 29 May 2018. See EY Global Tax alert, OECD releases outcomes of the second phase of peer reviews on BEPS Action 13 1. See EY Global Tax Alert, OECD releases final report on countering harmful tax practices under Action 5, dated 8 October 2015. 2. See EY Global Tax Alert, OECD releases peer review documents on BEPS Action 5 on Harmful Tax Practices and on BEPS Action 13 on Country-by-Country Reporting, dated 6 February 2017. 3.

Prevent . treaty abuse . Action 2 . Neutralize the effect of .
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The report suggests that the following three pronged approach be taken to tackle treaty abuse: 1) First, a clear statement in tax treaties that the Contracting States, when entering into a treaty, All rights reserved. 25 OECD – BEPS 2014 Preventing the granting of treaty benefits in inappropriate circumstances Treaty abuse and treaty shopping identified as one of the most important sources of BEPS concerns Three pronged approach recommended to address treaty abuse and shopping arrangements Design rules to prevent granting of treaty benefits in inappropriate circumstances Tax treaties not intended to be used to generate double non-taxation Identification of tax policy consideration Action 14 contains one of only four minimum standards implemented by the BEPS project, on which competent authorities will be externally monitored. This reaffirms the importance of MAP as a principle, both at a treaty level, and in ensuring greater clarity for taxpayers and fellow competent authorities on how each country provides access to MAP and what MAP procedures exist.

The goal of Action 6 is to prevent the granting of treaty benefits in inappropriate circumstances. It needs to be made clear that tax treaties are not intended to be used to generate double non-taxation. In addition, countries should consider this before entering into a tax treaty with another country.
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5 Oct 2015 Although the reports have been billed as the 'final' BEPS reports and shopping (Action Point 6), Country-by-Country Reporting (Action 13),

The Action Plan identifies 15 actions to address BEPS in a comprehensive manner and sets deadlines to implement these actions. The Action Plan recognises that the actions to counter BEPS must be complemented with actions that ensure certainty and predictability for business. Work to improve the effectiveness of the mutual agreement The Action Plan identifies treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns. Action 6 The OECD proposal provides a three-pronged approach: Treaty statement re: anti-avoidance rule and treaty shopping opportunities; Specific anti-abuse rule based on Limitation of Benefit The BEPS Action Plan states that “Treaty abuse is one of the most important sources of BEPS concerns”, and then describes Action 6 as recommended the following “three-pronged approach”: 2015-10-05 BEPS Action 14: Make Dispute Resolution Mechanisms More Effective The Organization for Economic Cooperation and Development on December 18, 2014, must be read in the broader context of the intention to introduce a three-pronged approach designed to represent a step change in the resolution of treaty-related disputes through the MAP. Corporate/International tax–Actions1to7and11, 12,14and15. 6. ActionPlan1–DigitalEconomy Action 1: Addressing the tax challenges of the Digital Economy (‘DE’) • No special tax regime has been prescribed. BEPS measures under other Action Plans seek to address these challenges.

OECDBEPS–Inanutshell The coherence of corporate tax at the international level Transparency, coupled with certainty and predictability Realignment of taxation and substance 15 Actions organized around three main pillars On 19 July 2013 OECD released an Action Plan on Base Erosion and Profit Shifting (BEPS) which was presented to the meeting of G20 Finance Ministers in Moscow Purpose of the

The output is to recommend changes to the Model Tax Convention and recommendations for the design of domestic rules to prevent unintended uses of tax treaties such as group action is more complex and takes time to work out. Such is the case with the OECD’s approach to non-collective investment vehicle funds (non-CIV funds) and their interaction with the BEPS Action 6 on preventing the granting of treaty benefits in inappropriate circumstances. Action 6 refresher Action 6: Preventing the Granting of Treaty benefits in inappropriate circumstances The BEPS Action Plan had identified treaty abuse and treaty shopping as one of the most important sources of BEPS concerns. In order to address these concerns, the task force carried out work to develop model treaty c rules and identify the tax BEPS Project including its four minimum standards (Action 5 on harmful tax practices, Action 6 on treaty abuse, Action 13 on country-by-country reporting and Action 14 on dispute resolution mechanisms). They will also be able to monitor the evolution of the tax raised by the digital economy challenges (Action 1) and Action 10 . Assuring that TP outcomes are in line with value creation (Other high-risk transactions) Action 11 . Establish methodologies to collect and analyze data on BEPS and the actions to address it .

BEPS measures under other Action Plans seek to address these challenges. • Destination based tax for GST / VAT Indian perspective Impact of BEPS Implementation - there was a fairly broad consensus that 1) the Action 1 VAT recommendations are being widely implemented and that they are having a significant impact on tax collection in market jurisdictions; 2) the BEPS changes are impacting business models (particularly Action 7 encouraging a shift towards buy/sell), and that consistency in business model globally was The MLI also implements the BEPS Action 6 minimum standard by implementing a principal purpose test (PPT). Under the PPT rule, a tax treaty benefit is denied where one of the principal purposes of an arrangement or transaction is to directly or indirectly obtain the benefit, unless the granting of that benefit in the circumstances would be in accordance with the object and purpose of the See EY Global Tax Alert, OECD releases final reports on BEPS Action Plan, dated 6 October 2015. See EY Global Tax Alert, OECD releases peer review documents on BEPS Action 5 on Harmful Tax Practices and on BEPS Action 13 on Country-by-Country Reporting, dated 6 February 2017. See EY Global Tax Alert, OECD releases first annual peer review report on Action 5, dated 5 December 2017. 5.1 Approach number of BEPS Actions to each other, and since the BEPS-project is a huge and ambitious project of the OECD, this research may show how closely connected this huge project actually is.