UK and International Tax news

Discussion Draft On Action 6 Of BEPS Action Plan – Treaty Abuse

Tuesday 18th March 2014

The OECD has recently released a discussion draft that includes proposals with respect to Action 6 of the BEPS Action Plan [Prevent Treaty Abuse].

In July 2013, the OECD published its Action Plan which identified 15 actions to address BEPS in a comprehensive manner and set deadlines to implement these actions.  The Action Plan identifies treaty abuse and, in particular, treaty shopping, as one of the most important sources of BEPS concerns.

Action 6 proposes to develop model treaty provisions and recommendations regarding the design of domestic rules to prevent the granting of treaty benefits in inappropriate circumstances.  Work is also to be done to clarify that tax treaties are not intended to be used to generate double non taxation and to identify the tax policy considerations that, in general, countries should consider before deciding to enter into a tax treaty with another country.  The work will be coordinated with the work on hybrids”.

The Action Plan also provided that work on the different areas will continue to include a transparent and inclusive consultation process and that all stakeholders, business, non governmental organisations, think tanks, and academia would be consulted.  As part of the consultation process, interested parties are invited to send comments on the discussion draft by 9 April 2014.

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