Preventing Treaty Abuse
1. Aufl. 2016
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I. S. 373Introduction
Treaty abuse has been the subject matter of a great deal of discussion and debate internationally in various forums. There have been efforts at both the domestic and international level to curb the abusive practices which seek to benefit from the weaknesses and loopholes in the current rules. The Base Erosion and Profit Shifting (‘BEPS’) project of the OECD and G20 countries is a significant step which, after a detailed study and public consultation, has provided a package of measures to be undertaken and changes to be made to current international tax rules to curb the abuse of treaties and international tax principles.
This contribution focuses on:
the risk of treaty abuse accorded to the concept of permanent establishment (‘PE’), more specifically, the concept of construction PE envisaged under Article 5(3) of the OECD Model Convention (‘MC’) and the related changes proposed under BEPS Action 7 (Preventing the Artificial Avoidance of PE Status);
the risk of treaty abuse relating to the exclusions from the definition of PE provided under Article 5(4) of the OCED MC and the related changes proposed under BEPS Action 1 (Addressing the Tax Challenges of the Digital Econo...