Preventing Treaty Abuse

I. S. 294Introduction

The year 2015 could be regarded as a year of significant changes in the international tax arena. Not only because the OECD released the package of final reports on BEPS, but also because the Governments of several countries began to modify their tax treaty policy guidelines and model conventions, in some cases inspired by the OECD project on BEPS. In the specific case of the Government of the United States, this trend resulted in the New US Model Income Tax Convention (released on 17 February 2016), which includes several of the amendments proposed by the OECD to its own model convention, but with some specific differences.

In the area of the limitation on benefits clauses, some of these differences could be regarded as tacit acceptance of the new OECD standard and some others could be regarded as direct opposites to the OECD standard. Whether both proposals will co-exist in the future or one will overshadow the other one, is yet to be defined in the policy-making arena.

With this in mind, this contribution provides for a main comparison between the new Article X proposed by the OECD under Action 6 Final Draft and the new Article 22 of the 2016 US Model Income Tax Conv...