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Release of discussion draft on Action 6 (Prevent Treaty Abuse) of the BEPS Action Plan

17 March 2014   (0 Comments)
Posted by: Author: OECD
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Author: OECD

Public comments are invited on a discussion draft that includes the proposals produced with respect to Action 6(Prevent Treaty Abuse) of the BEPS Action Plan.

In July 2013, the OECD published its Action Plan on Base Erosion and Profit Shifting. The Action Plan identifies 15 actions to address BEPS in a comprehensive manner and sets deadlines to implement these actions.

The Action Plan identifies treaty abuse, and in particular treaty shopping, as one of the most important sources of BEPS concerns. Action 6 (Prevent Treaty Abuse) reads as follows:

Action 6

Prevent treaty abuse

Develop model treaty provisions and recommendations regarding the design of domestic rules to prevent the granting of treaty benefits in inappropriate circumstances. Work will also be done to clarify 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 work will be co-ordinated with the work on hybrids.

The Action Plan also provided that "[t]he OECD’s work on the different items of the Action Plan will continue to include a transparent and inclusive consultation process” and that all stakeholders such as business (in particular BIAC), non-governmental organisations, think tanks, and academia would be consulted.

As part of that consultation process, interested parties are invited to send comments on this discussion draft, which includes the preliminary results of the work carried out in the three different areas identified in Action 6:

A. Develop model treaty provisions and recommendations regarding the design of domestic rules to prevent the granting of treaty benefits in inappropriate circumstances.

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

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

These comments should be sent on 9 April 2014 at the latest (no extension will be granted). The comments received by that date will be examined by the Focus Group at a meeting that will be held on the following week.

The draft proposals set out in this document do not represent the consensus views of either the Committee on Fiscal Affairs or its subsidiary bodies but rather are intended to provide stakeholders with substantive proposals for analysis and comment.

Comments on this discussion draft should be sent electronically (in Word format) by email to taxtreaties@oecd.org and should be addressed to:

Tax Treaties, Transfer Pricing and Financial Transactions DivisionOECD/CTPA

It is the policy of the OECD to publish all responses (including the names of responders) on the OECD website.

Public Consultation:

Persons and organisations who intend to send comments on this discussion draft are invited to indicate as soon as possible, and by 3 April at the latest, whether they wish to speak in support of their comments at a public consultation meeting on Action 6 (Prevent Treaty Abuse), which is scheduled to be held in Paris at the OECD Conference Centre on 14-15 April 2014. Persons selected as speakers will be informed by email by 4 April at the latest.

This consultation meeting will be open to the public and the press. Due to space limitations, priority will be given to persons and organisations who register first (we reserve the right to limit the number of participants from the same organisations). Persons wishing to attend this public consultation meeting should fill out their request for registration on line as soon as possible and by 3 April 2014 at the latest. Confirmation of participation, including venue access details, will be sent by email to participants by 4 April at the latest.

This meeting will also be broadcast live on the internet and can be accessed on line. No advance registration is required for this internet access.

The SAIT will be making a submission to OECD on this matter. Kindly submit all comments to efischer@thesait.org.za by no later than 08 April 2014.

This article first appeared on oecd.org.


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