A ministerial draft bill on statutory law with regard to specified issues of tax treaty application was sent out for comments in a public hearings procedure. The main goals of the new law are :

• to clarify the interaction of treaty law and domestic law (sec. 1);

• to allow for a set-off of losses incurred in foreign permanent establishments notwithstanding the exemption system available under most Austrian tax treaties (sec. 2);

• to ensure appropriate taxation of income allocated to Austria under the arm's length principle of tax treaties (e.g. in order to curb non-taxation in cases of interest free intercompany loans) (sec. 3);

• to take world wide income as the basis for the determination of the applicable tax rate in cases of secondary residence (sec. 4);

• to clarify the application of the per-country-limitation in cases of foreign tax credits (sec. 5);

• to set rules for the conduct of mutual agreement procedures and for rendering mutual assistance (secs. 6 to 8);

• to enable the Minister of Finance to counteract any misuse of double taxation treaties by removing the tax deductibility of expenses to the extent they are deemed to be financed out of income enyoing inappropriate treat...