Category: Treaty Abuse

Countries and Companies Square Off Over International Tax

An OECD initiative on tax evasion is causing ripples around the world While a host of topics — from the necessity and the proposed scope of corporate tax reform, to corporate rate reduction and corporate inversions — are of major concern to those engaged in international tax, the overriding issue… – Continue reading

UK: Weekly Tax Update – Monday 20 April

1 General news 1.1 HMRC organisation chart HMRC has published its latest organisation chart showing the names of senior management. One point to note is the number of senior people now in roles such as change management as opposed to being in pure technical roles. This clearly demonstrates the direction… – Continue reading

New tax treaty between Hong Kong and mainland China which has consequences for shipping, airline and securities trading companies

This is relevant mainly for (1) Hong Kong companies or investment funds selling securities in Chinese listed companies and (2) ship or aircraft leasing companies resident in Hong Kong who (finance) lease vessels and aircraft to lessees in mainland China. On 1 April 2015, Hong Kong and mainland China signed… – Continue reading

The outlook for BEPS in 2015

National tax laws are struggling to keep pace with the rise of the digital economy and the progress of multinational companies. These factors leave gaps that are susceptible to misuse and lead to cases of double non-taxation, which undermine the integrity and fairness of tax systems around the world. The… – Continue reading

OECD launches tax avoidance mandatory disclosure plan

AS PART of its Base Erosion and Profit Shifting (BEPS) project, the OECD has launched a public consultation on Action 12 – the mandatory disclosure of tax avoidance strategies by multinational companies. The 83-page draft document provides examples of various disclosure regimes in place in member countries, setting out recommendations… – Continue reading

BEPS Action Plan 15: Multilateral instrument for bilateral tax treaties

This article continues our series on the Base Erosion and Profit Shifting (BEPS) project, and the Action Plans that have so far been submitted, by the Organisation for Economic Co-operation and Development (OECD). We now look at Action Plan 15 on Developing a Multilateral Instrument to Modify Bilateral Tax Treaties…. – Continue reading

Budget 2015: GAAR may be deferred by two years to boost business sentiment

NEW DELHI: The much-feared general anti avoidance rules (GAAR) could be deferred by about two years so that business sentiment is allowed to improve in India but will need to be rolled out in some form or the other by 2017, in sync with the international framework on preventing treaty… – Continue reading

Recent progress in the OECD’s BEPS project

Within the framework of the BEPS (Base Erosion and Profit Shifting) action plan, adopted in July 2013, on last September 16, the OECD published its first recommendations in the form of reports on 7 of the 15 points of the action plan: Address the tax challenges of the digital economy… – Continue reading

The OECD’s BEPS Action Plan poses immediate challenges for oil and gas companies

Already on the radar of governments and regulatory bodies around the world, recent developments with respect to the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Action Plan are raising further the profile of oil and gas companies globally with both tax authorities and the… – Continue reading

UK Parliamentary Hearing Held On BEPS Response

British Members of Parliament (MPs) have questioned the Government’s unilateral decision to push for the introduction of a Diverted Profits Tax (DPT) ahead of the completion of the Organisation for Economic Cooperation and Development’s (OECD’s) work on base erosion and profit shifting (BEPS). In a debate held in Parliament on… – Continue reading

South Africa urged to finalise renegotation of Mauritius tax treaty

CAPE TOWN — South Africa needs to finalise the renegotiation of its tax treaty with Mauritius as soon as possible to prevent the loss of large sums of money through “treaty shopping” the Davis tax committee has urged. The committee released its interim report on ways to prevent base erosion… – Continue reading

Lots of BEPS Output – What Outcome?

*Ernst & Young LLP, New York, NY The BEPS beat plays on. Congratulations to the OECD for meeting (mostly) the ambitious goals for release of their reports on seven action items in September 2014 – right on schedule on September 16. The documents released on September 16 relate to Action… – Continue reading

The Best Job in the World

This is going to be the plum job for any international tax practitioner: Competent Authority for the Republic of Ireland. It seems pretty clear that the Base Erosion and Profit Shifting (BEPS) project will meet its announced deadline of the end of 2015 to produce final reports on all of… – Continue reading

Luxembourg budget 2015 – main tax measures at a glance

Advance Agreements The so-called tax rulings and advance pricing agreements will be formalised by the introduction of appropriate provisions in the Luxembourg tax laws. By this means, Luxembourg will be able to offer as from 1 January 2015 a unified system providing taxpayers with legal certainty and a consistent and egalitarian… – Continue reading

The inversion backlash

Something strange happened in 2014 — Americans became very interested in corporate tax policy. It started in the spring, when U.S.-based pharmaceutical giant Pfizer, which produces blockbuster drugs like Lipitor and Viagra, floated a possible merger with its British-based rival AstraZeneca. Normally a merger of that size would make a… – Continue reading

The OECD action plan on Base Erosion and Profit Shifting

IN TAX, the latest global buzzword is “BEPS” or base erosion and profit shifting. BEPS refers to the practice of multinational corporations (MNCs) of shifting profits from high tax jurisdictions to low tax jurisdictions as a tax mitigation strategy. In February 2013, the Organization for Economic Co-operation and Development (OECD)… – Continue reading

B2B: Beneficial Owner of Income: Treaty Benefits and the Introduction of the New Rules

The MT Conferences section did not involve the reporting or the editorial staff of The Moscow Times. Russian business is trembling in expectation of the new year when major changes recently introduced to the tax legislation will enter into force. There has been a lot of discussion regarding the increase… – Continue reading

North America leads global increase in MAP uptake

The US and Canada are at the forefront of a global increase in new mutual agreement procedures (MAPs) being initiated, OECD figures show. There were 1,910 new MAPs in 2013, a 14% increase from 2012, when there were 1,678 new MAPs. North America accounted for most of this growth, with… – Continue reading

Malta should brace itself for tax haven clampdown – AD

Greens say Malta should start thinking of Plan B on its attractive tax regime for foreign companies as pressure from major EU states on European Commission grows Malta should be prepared to diversify its current fiscal policy and even wave goodbye to its incentives to attract foreign industry, Alternattiva Demokratika… – Continue reading

India’s Bilateral Investment Treaties Leave Room for Abuse

In December 2013, despite an ongoing official review of its existing agreements, the Indian government signed a bilateral investment treaty (BIT) with the United Arab Emirates. Information on the deal was recently made public by the Ministry of Finance after persistent efforts by civil society groups. Earlier in 2013, the… – Continue reading

Mauritius Overtakes Singapore as India’s Top Source of FDI

DELHI – Mauritius has overtaken Singapore as the largest source of foreign direct investment (FDI) in India, it was announced earlier this week. During the April-September period, Mauritius emerged as the strongest contributor of investment with an inflow of $4.19 billion. During the same period, Singapore provided $2.41 billion in… – Continue reading

Canada: The BEPS Deliverables: A Macro Critique

What unites the dates February 12, 2013, July 19, 2013, and September 16, 2014? They are the key dates to this point in the OECD’s crusade against base erosion and profit shifting, which will be remembered either as a well-coordinated campaign against abusive tax avoidance by large multinational enterprises, or… – Continue reading

Crackdown on tax abuses by technology companies

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email to buy additional rights. Multinational companies are braced for a tax crackdown after George Osborne vowed to use… – Continue reading

ATO letting big multinationals get away with it

Martin Lock was formerly the top withholding-tax specialist at the Tax Office, a role that encompassed oversight of profit shifting by multinationals. He is one of many former officers who have voiced their concerns to Fairfax Media about the challenge of arresting the slide in tax receipts from multinational companies… – Continue reading

OECD draft addresses tax treaty shopping

The OECD has invited comments on a discussion draft on proposed changes to the OECD model tax convention to prevent tax treaty abuse. The OECD’s recent report on action 6 of the base erosion and profit shifting (BEPS) action plan recognised that further work would be needed on the precise… – Continue reading

Base erosion and profit shifting – a South African perspective

The concept of base erosion and profit shifting (BEPS) has been debated at various international forums following discussions at the G20 Finance Ministers and Central Bank Governors meeting and the G20 Heads of State summit in Russia last year. The Organisation for Economic Co-operation and Development’s (OECD) BEPS Action Plan… – Continue reading

Base erosion and profit shifting – treaty shopping

The concept of base erosion and profit shifting (“BEPS”) has been much discussed at various international forums including the G20 Finance Ministers and Central Bank Governors meeting in July 2013 in Moscow as well as the G20 Heads of State meeting in September 2013. From a South African perspective, the… – Continue reading

Clampdown on tax avoidance

By closing the tax gap, South Africa can reap billions of rands to benefit the economy. A global crackdown on tax avoidance has begun and South Africa is forging ahead in a bid to tackle wealthy individuals and corporates who practise this tactic. The initiative is better poised to succeed… – Continue reading

BEPS – Discussion draft on follow-up work under Action 6 (prevent treaty abuse)

November 21:  The Organisation for Economic Cooperation and Development (OECD) today released a discussion draft [PDF 179 KB] concerning follow-up work as mandated under a report with respect to Action 6 (prevent treaty abuse) under the base erosion and profit shifting (BEPS) action plan. Background The OECD in September 2014… – Continue reading

BEPS – Discussion draft on follow-up work under Action 6 (prevent treaty abuse)

November 21:  The Organisation for Economic Cooperation and Development (OECD) today released a discussion draft [PDF 179 KB] concerning follow-up work as mandated under a report with respect to Action 6 (prevent treaty abuse) under the base erosion and profit shifting (BEPS) action plan. Background The OECD in September 2014… – Continue reading

Base Erosion and Profit Shifting: The Australian Perspective

Background In July 2013, the G20 Finance Ministers, including Australia, fully endorsed the base erosion and profit shifting (BEPS) Action Plan. As a result of the Action Plan, the Australian government encouraged a new commitment to focus resources on investigating international business structures to ensure companies pay tax in the… – Continue reading

The costs of offshore tax avoidance, part 2

In our previous post, we looked at the ways that global corporations minimise their tax burdens by routing income through offshore tax havens and transfer pricing. The ultimate beneficiaries of these shenanigans, of course, are actual people rather than legal entities. Many of these people also take advantage of offshore… – Continue reading

The costs of offshore tax avoidance, part 1

Nobody likes paying taxes. The rich, however, can reduce the burden more easily than others because capital is more mobile than labour. A clever new paper in the Journal of Economic Perspectives by Gabriel Zucman attempts to measure how much government revenue is lost because of the careful re-routing of… – Continue reading

Cyprus: Cyprus India Relations – Cyprus May No Longer Be A Tax Haven For Funds Or May It?

A publication in the Economic Times has caused much debate in India since after blacklisting Cyprus for not sharing information on tax evaders, India is now looking to take away the favourable tax treatment available to investors from the European tax heaven under the bilateral tax treaty between the two… – Continue reading

Benelux-China legal update

Recent months saw various important developments that are relevant to Sino-European trade and investment. These include (i) changes to the EU Parent-Subsidiary Directive, (ii) the entry into force of the double tax treaty between Luxembourg and Taiwan, and (iii) proposed changes to China’s Foreign Investment Catalogue and the Governmental Verifications… – Continue reading

German Federal Fiscal Court decides on treatment of hybrid entities under the German-US double taxation treaty 14 November 2014

Hybrid entities have long been a tool for corporate tax planning. While tax authorities have fought the use of such hybrid mismatches for tax planning purposes, national efforts to prevent the use of hybrid mismatches have not proven to be very efficient, explain Michael Graf and Timothy Santoli, of Dentons… – Continue reading

EU tax treaties draining developing countries

Spain negotiated the largest rate reductions in its tax treaties with developing countries, out of 15 EU nations scrutinised for their record on international tax-dodging in the wake of the Luxembourg Leaks scandal. Developing countries were missing out on billions of much needed-revenue as a result of the tax rate… – Continue reading

Indian Government Loses Major Tax Case to Vodafone

Vodafone sign in India. Photo: Ishan Khosla. Used under Creative Commons license. Vodafone recently won a rare – but potentially very significant – victory over Indian tax authorities. The Bombay High Court dismissed the government demand for the company to pay 30 billion rupees (about $490 million) for a share… – Continue reading

Double taxation agreements and treaty shopping

The taxation of a person is based on two principles: Source and Residence. A person for tax purposes includes an individual, trust, company, partnership and any form of business arrangement one chooses to take on. It should be noted that with globalisation, there is a constant mix of these two… – Continue reading

Countries and Companies Join OECD BEPS Train

The OECD’s Action Plan on BEPS was published in July 2013 to reform the international tax system. The Action Plan identified 15 Actions to address BEPS. Seven of the 15 Action Plan items are now moving out of the station. I. Introduction On September 16, 2014 the OECD, together with… – Continue reading

The Big Picture: Wealth and Estate Planning in Argentina

It is said that Argentina faces an economic and political crisis every 10 years. Whenever a crisis arises, Argentinians’ right of ownership is at risk. Devaluation, asymmetric pesification and the current foreign exchange restrictions are a few examples of the challenges we face. What’s more, according to a recent OECD… – Continue reading

Kenya: NGO Moves to Court Over Double-Taxation Agreement

Tax Justice Network Africa, which campaigns against harmful tax policies that favour the wealthy and perpetuate inequality, has moved to the High Court to stop a double-taxation treaty between Kenya and Mauritius. Mauritius is a popular tax haven for companies with multinational operations, tilting scales against countries that sign bilateral… – Continue reading

Lobby sues Treasury CS over ‘illegal’ tax deal with Mauritius

A tax civil society has sued National Treasury Secretary Henry Rotich over an ‘illegal’ agreement signed with Mauritius, in a major litigation that could affect thousands of companies operating in Kenya. The suit filed at the High Court by Tax Justice Network-Africa (TJN-A) demands that Rotich withdraws a taxation treaty… – Continue reading

ATO alleges complex Chevron scheme slashed tax bill by $258m

Australian tax authorities allege multinational oil giant Chevron used a series of loans and related party payments worth billions of dollars to slash its tax bill by up to $258 million. New documents filed in a long-running dispute in the Federal Court show how Chevron allegedly engaged in a complex… – Continue reading

EU turns its attention to Amazon

European body adds another high-profile name to its crackdown on multinationals’ tax avoidance in bloc. The European Union is broadening its crackdown on multinationals’ tax avoidance schemes, opening an investigation yesterday into Amazon’s practices on suspicion the online retailer is not paying its dues on profits made across the 28-nation… – Continue reading

BEPS, Broken Promises, and What the OECD Can Learn from the WTO About Dispute Settlement Procedures

The question has often arisen whether “international law” is an oxymoron – whether “obligations” in income tax treaties and other international agreements are really binding upon the parties, when they are not buttressed by some sort of enforcement mechanism. That question has never been more relevant in the tax world… – Continue reading

Worldwide: OECD Releases First BEPS Recommendations To G20 In Accordance With Action Plan

As a part of the OECD/G20 project to combat base erosion and profit shifting (“BEPS”), the OECD released the first set of reports and recommendations on September 16, 2014. These reports address seven of the actions described in the 15-point action plan to address BEPS published in July 2013 (the… – Continue reading

Kenya: KRA After Sh30 Billion in Audit of Companies

The taxman is willing to “negotiate and strike a balance” with multinationals being audited for transfer pricing misconduct, a drive it says has a potential to realise over Sh30 billion. The Kenya Revenue Authority told a workshop organised by the Association of Chartered Certified Accountants in Nairobi that this will… – Continue reading

IRS Denies Treaty Benefits Despite Lack of Treaty Shopping

In Starr International Company, Inc., v. United States, the taxpayer (“Starr International Company, Inc.” or “SICO”) filed a complaint in the United States District Court for the District of Columbia seeking a tax refund from the IRS of approximately $38 million.  The refund is allegedly due to an overpayment of… – Continue reading