Tax

Neutralising the Effects of Hybrid Mismatch Arrangements, Action 2 - 2015 Final Report

In series:OECD/G20 Base Erosion and Profit Shifting Projectview more titles

Published on October 05, 2015

Also available in: French

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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 I of the report sets out recommendations for rules to address hybrid mismatches in respect of payments made under a hybrid financial instrument or payments made to or by a hybrid entity.  It also recommends rules to address indirect mismatches that arise when the effects of a hybrid mismatch arrangement are imported into a third jurisdiction. The recommendations are supported by a commentary and examples to illustrate how they should apply. 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.

BEPS PACKAGE 2015

KEY MATERIAL

 

WEBCASTS

Watch the discussions with senior members from the OECD's Centre for Tax Policy and Administration on the final outputs of the OECD/G20 Base Erosion and Project Shifting Project, including the next steps and the involvement of developing countries. 

  • A press conference for journalists with Pascal Saint-Amans, Director, CTPA.
  • A BEPS webcast for tax experts with senior members of CTPA.

  

Video

Watch an example of how the OECD/G20 BEPS Project will revise the international tax rules.

FURTHER INFORMATION

Base Erosion and Profit Shifting (BEPS) refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in little or no overall corporate tax being paid.