New Discussion Launched on Tax Treaty Abuse

March 18, 2014 International Tax Cooperation

Tax Treaty AbusePARIS – The OECD is initiating an international discussion into measures to prevent the occurrence of profits shifting and tax evasion through the abuse and misuse of international tax treaties.

Late last week the Organization for Economic Cooperation and Development released a public discussion draft “Preventing the Granting Of Treaty Benefits In Inappropriate Circumstances”, addressing the controversial practices and techniques used by some multinational corporations and wealthy individuals to avoid, or even evade, tax obligations in their home countries and abroad.

The new public discussion draft concentrates on creating and clarifying guidelines and provisions to prevent the abuse of existing and future international tax treaties through treaty shopping and any other intentional actions taken to circumvent treaty limitations.

The draft also discusses the legislative changes which may be needed to ensure that international tax treaties are not used to create situations which “generate double non-taxation”.

The OECD also wants to look into tax principals and policies recommended to be considered by any government preparing to enter into a new tax agreement with another country.

Comments and input on the points in the public discussion paper may be submitted to the OECD by April 3rd, and the collected information will be compiled and discussed in a meeting to be held on in Paris April 14th.

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