Preventing Treaty Abuse

I. S. 24Introduction

The purpose of this paper is to provide a historical overview of the OECD’s work on abuse of tax treaties and in particular the changes to the Commentary of OECD Model Tax Convention. This includes several reports which expressed the OECD‘s views on this topic and the OECD recommendation on Action 6 of the BEPS project. Section II. discusses the initial work performed by the OECD in the period leading up to the adoption of the 1977 OECD Model Tax Convention. Section III. provides a summary of several reports resulting from an “in-depth study” of The Committee Fiscal Affairs regarding treaty abuse which led to the extension of the improper use of the convention section in the OECD Model Tax Convention. Section IV. elaborates on the changes to the Commentary on Article 1 of OECD Model Tax Convention, which clarifies the relationship between domestic anti-avoidance rules and tax treaties. Section V. addresses several updates and the historical development on the beneficial ownership concept. Section VI. examines recommendations on Action 6 of the OECD BEPS Project on preventing treaty abuse. Based on above analysis, section VII. will provides general conclusions.

II. 1977 version of the OE...