OECD/G20 Base Erosion and Profit Shifting Project

2313-2612 (online)
2313-2604 (print)
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Addressing base erosion and profit shifting is a key priority of governments around the globe. In 2013, OECD and G20 countries, working together on an equal footing, adopted a 15-point Action Plan to address BEPS. Beyond securing revenues by realigning taxation with economic activities and value creation, the OECD/G20 BEPS Project aims to create a single set of consensus-based international tax rules to address BEPS, and hence to protect tax bases while offering increased certainty and predictability to taxpayers. A key focus of this work is to eliminate double non-taxation. However in doing so, new rules should not result in double taxation, unwarranted compliance burdens or restrictions to legitimate cross-border activity.

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Neutralising the Effects of Hybrid Mismatch Arrangements

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16 Sep 2014
9789264218819 (PDF) ;9789264218796(print)

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This report sets out recommendations for domestic rules to neutralise the effect of hybrid mismatch arrangements and includes changes to the OECD Model Tax Convention to address such arrangements. Once translated into domestic law, the recommendations in Part 1 of the report will neutralise the effect of cross-border hybrid mismatch arrangements that produce multiple deductions for a single expense or a deduction in one jurisdiction with no corresponding taxation in the other jurisdiction. Part 1 of the report will be supplemented by a commentary, which will explain the recommended rules and illustrate their application with practical examples. Part 2 of the report sets out proposed changes to the Model Convention that will ensure the benefits of tax treaties are only granted to hybrid entities (including dual resident entities) in appropriate cases. Part 2 also considers the interaction between the OECD Model Convention and the domestic law recommendations in Part 1.

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Table of Contents

Executive summary
Part I. Recommendations for the design of domestic rules
Chapter 1. Definition of hybrid mismatch arrangement
Chapter 2. Arrangements that produce D/NI outcomes
Chapter 3. Arrangements that produce DD outcomes
Chapter 4. Arrangements that produce indirect D/NI outcomes
Chapter 5. Implementation
Chapter 6. Definitions in relation to scope
Chapter 7. Key terms
Part II. Recommendation on treaty issues
Chapter 8. Dual–resident entities
Chapter 9. Treaty provision on transparent entities
Chapter 10. Interaction between Part I and tax treaties

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