Base Erosion and Profit Shifting – A project of the OECD to curb international income tax planning.
BEPS Action Plan 6 observes that corporations are misusing Double Taxation Avoidance Agreement (DTAA) provisions by indulging in treaty shopping. A typical example of treaty abuse that BEPS Action Plan 6 seeks to counter is that of an American corporation entering the Indian market through Mauritius because of the favourable India-Mauritius DTAA. An intermediary mailbox…
I wrote in my last blog that despite its impact, corporate tax avoidance is one of the lesser debated issues in India. This is what I wrote: “Multinational tax avoidance has almost never made it to the front pages of popular Indian newspapers and has never been discussed on primetime TV news debates. That corporate…
In 1789, Benjamin Franklin wrote in a letter to French scientist Jean-Baptiste Leroy: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” Franklin was right then and he is right now. However, there is one more commonality…
The financial crisis of 2008 and the Great Recession that followed led to millions losing their jobs and their homes. In Europe, the governments reacted to the pressure on the Eurozone by imposing austerity and sharply cutting the social safety net. While the Obama Administration made no such cuts, the size of the US fiscal…
The proposal for upholding a minimum effective tax rate on corporate profits, on which the OECD Inclusive Framework recently invited comments, has received a lot of criticism. A minimum tax would deny developing countries the possibility to compensate for a poor investment climate by offering tax breaks, harming their development. Worse, it would undermine the…
Transfer pricing cases in India are estimated to account for more than half of the world’s transfer pricing disputes. Prolonged transfer pricing litigation due to overburdened courts and tribunals is a sad reality for many companies doing business in India. The consequence is that a cloud of uncertainty constantly hangs over cross-border, intra-group transactions routinely…
On 30 August 2018 the OECD released the fourth round of BEPS Action 14 peer review reports on improving tax dispute resolution mechanisms. Included in this round was a report on Australia. The report concluded that Australia meets part of the elements of the Action 14, and in particular meets some of the requirements regarding…
If the BEPS Project is considered formally concluded with the signature of the Multilateral Instrument, the war against base erosion and aggressive tax planning is still ongoing, with many battles remaining to be won. In this context, each and every transaction that can potentially serve aggressive tax planning is key target for policy-makers at the…
It is common to face resistance in MAP application, which is essentially based on misconception of Double Taxation Conventions (DTCs). As Article 9(1) establishes the arm’s length standard, which presents a range of possible prices, that misunderstanding may imply more economic double taxation. Given the Brazilian position on recent transfer pricing changes, these problems become…
Since the OECD started conceiving and implementing the BEPS project, the major argumentation in favour of the new policies is mainly based on the refrain that everybody should pay their “fair share” of taxes. It is hard to find any publicly available explanation about what exactly lies behind the idea of a “fair share” of…
The Tax Court of Canada decision in Alta Energy Luxembourg S.A.R.L. v. The Queen, 2018 TCC 152 (CanLII) on August 22, 2018 may provide useful pointers to the meaning and application of the PPT found in Article 7(1) of the MLI and Article 29(9). A Luxembourg resident company claimed exemption from Canadian income tax under…
The idea for this article came to me after I read a piece published by the International Tax Review with the title “Mexico confirms that US may qualify as a preferential tax regime in light of the 2017 Tax Cuts and Jobs Act”.[1] Instead of curating a proper blacklist, or a published list of tax havens…
The update on tax certainty IMF/OECD Report for the G20 Finance Ministers and Central Bank Governors published on 22 July 2018 may not have been everyone’s summer holiday reading. This report follows on from the 2017 IMF/OECD Report for the G20 Finance Ministers in March 2017. It should certainly give pause for thought. The “tax…
On May 11th a very interesting conference with the topic “How Source and Residence have Developed: Rethinking the Principles of International Income Taxation” has taken place, in Bergamo, organised by the Department of Law of the University of Bergamo and by the University of Heidelberg. Having not stayed until the discussion, I could not comment…
