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BEPS Action 6 follow-up: Preventing treaty abuse

  • On 21 November 2014, the OECD, as part of its work on the Action Plan to address Base Erosion and Profit Shifting ('BEPS'), released a follow-up Discussion Draft on Action 6 in relation to preventing treaty abuse.
  • This Discussion Draft provides stakeholders with the opportunity to comment on how greater certainty could be provided through the model treaty and/or commentary in certain open areas.
  • Issues to be addressed as part of the follow-up work include the limitation on benefits (LOB) rule, the principal purposes test (PPT) and a new treaty tie-breaker test.
  • Comments should be sent to the OECD by 9 January 2015.

When the OECD issued the Action 6 deliverable on 16 September 2014, it acknowledged that further follow-up work was required in relation to certain aspects of the work on Action 6. In particular, further work was required in relation to the LOB rule and policy considerations relevant to treaty entitlement of collective investment vehicles (CIVs) and non-CIV funds, amongst other matters.

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