The new draft guidelines for corporation tax, which are presently subjected to a hearings procedure in Austria, are proposing to terminate the current administrative practice according to which the so called exemption-with-progression-clause in double taxation conventions (Art. 23 para. 3 OECD-MC) is applied not only for the computation of income tax but also for corporation tax purposes. If losses incurred in foreign permanent establishments exceed the income from domestic sources (excessive losses) such administrative practice leads to the application of a 0% tax rate for both taxes. This exempts the domestic part of the income from tax and creates a result that corresponds fully to domestic law which permits a set off of foreign losses against domestic income. If the application of a 0% under the progressions clause in a treaty were to be denied for corporate tax purposes in the future then corporations with excessive foreign losses would lose their tax exemption with regard to the domestic part of their income. In other words, it would be the tax treaty that worsens the tax position of corporate taxpayers and opens up for taxing rights which are not available under domestic law...