Introduction to Arbitration

https://media.rss.com/taxbeech/feed.xml At present, the Mutual Agreement Procedure (MAP) resolves the tax issues arising from cross-border tax. It has been successful in its attempts to resolve tax matters brought by taxpayers to the competent authorities. But as per the OECD MAP statistics 2020, it is a long-drawn process. https://www.youtube.com/watch?v=j7uX9ZdUgG0&list=PLYkyV5logMkUCUKMAkwesbgVNc7Z2K-9X&index=1 ArbitrationImpact of BEPS on ArbitrationScope of Arbitration … Continue reading Introduction to Arbitration →

Article 17 of MLI – Corresponding Adjustments

What is the corresponding adjustment? When the contracting jurisdiction carries out the adjustment in the price between the associated enterprises, it may lead to economic double taxation. The enterprise in a Contracting jurisdiction whose profits are revised upwards will be liable to tax on profit already taxed in the hands of its associated enterprise in … Continue reading Article 17 of MLI – Corresponding Adjustments →

Article 15 of MLI | Person Closely Related to an Enterprise

The phrase ‘person closely related to an enterprise’ plays a critical role in applying Article 12, Article 13, and Article 14 of MLI. Article 15 of MLI defines this phrase based on the text of Article 5(6)(b) of the OECD Model Tax Convention as set out on pages 16 and 17 of the Action 7 … Continue reading Article 15 of MLI | Person Closely Related to an Enterprise →

Article 14 of MLI | Splitting up of Contracts

Splitting up of contracts is a strategy used for artificial avoidance of Permanent Establishment. Action 7 report notes that as a common strategy for avoiding PE through abuse of Article 5(3) of the OECD Model Tax Convention. Article 14 of the MLI provides to curb this abuse explicitly. Article 14(1) of MLI – Splitting up … Continue reading Article 14 of MLI | Splitting up of Contracts →

Article 13 of MLI | Exceptions to Permanent Establishment Rule

Article 13 of the MLI modifies Article 5(4) of the OECD Model Tax Convention, which deals with a list of exceptions that do not constitute a Permanent Establishment. The rationale behind creating an exception list is that all activities mentioned in the list have a preparatory or auxiliary character that is not enough to establish … Continue reading Article 13 of MLI | Exceptions to Permanent Establishment Rule →

Article 12 of MLI | Avoidance of PE through Commissionnarie Arrangements

A country has a right to tax the income of its residents and the income of PE of non-resident MNEs. However, through a web of tax planning and corporate structures, many large corporates have artificially avoided the establishment of PE through Commissionnarie Arrangements (covered in Article 12 of MLI) and similar strategies. An OECD study … Continue reading Article 12 of MLI | Avoidance of PE through Commissionnarie Arrangements →

Article 11 of MLI | Country’s right to tax its residents – Savings Clause

Two countries enter into a tax treaty to allocate the taxation rights between them about cross-border income. It is applicable when a resident of one country derives income from another country. Most articles of the treaty regulate or limits the source-based taxation rights of the country. The domestic tax laws always regulate residence-based taxation. To … Continue reading Article 11 of MLI | Country’s right to tax its residents – Savings Clause →

Article 10 of MLI – PE Triangular Case

Article 10 of the Multilateral Instrument deals with Anti-abuse Rule for Permanent establishments Situated in Third Jurisdictions, commonly known as PE Triangular cases. Before we dwell on it, beginners can view our exclusive post on Triangular cases to understand the concepts better. Provisions of Article 10 of MLI only intend to cover the Triangular cases … Continue reading Article 10 of MLI – PE Triangular Case →

Summary of changes to Preamble | Article 6 | MLI

Article 6 of MLI introduces changes in the Preamble of the Covered Tax Agreements. It is a minimum standard as recommended under BEPS Action 6 report. We have discussed in detail the preamble stated under Article 6 of MLI in our previous post. Click here to read it. MLI preamble will be in place of … Continue reading Summary of changes to Preamble | Article 6 | MLI →

Elimination of double taxation – Article 5 of MLI

Article 5 of the MLI contains provisions that provide three options for the elimination of double taxation. Countries may choose to address cases of double non-taxation that may where countries use the exemption method to prevent double taxation of income that is not taxed in the State of the source. OECD model convention provides two … Continue reading Elimination of double taxation – Article 5 of MLI →