Access to Treaty Benefits

S. 4221. Introduction

The effort into tackling tax treaty abuse is not a novelty. Yet, this has never been found to be in the spotlight as it has been since the outbreak of certain multinationals’ “aggressive” tax planning strategies in the media and the subsequent release of the Base Erosion and Profit Shifting (BEPS) Project by the Organisation for Economic Co-operation and Development (OECD) alongside the Group of Twenty (G20). Indeed, among the BEPS 15 initiatives, Action 6 called for a review of the existing measures to prevent the granting of treaty benefits in inappropriate circumstances once tax treaty abuse has been identified as one of the most significant sources of BEPS concerns. Under its final report, two types of treaties’ improper use were detected: cases in which a person tries to circumvent limitations provided by the treaty itself (type 1) and cases in which a person tries to avoid the provisions of domestic tax law by using treaty benefits (type 2). Thus, solutions were put forward for each one of these categories.

Among the recommended measures, Action 6 sets out a twofold minimum standard to be implemented by the OECD/G20 Inclusive Framework’s countries into their tax...