In the below flowchart we have tried to simplify the interaction between the Treaty Specific Anti Abuse Rules, Principal Purpose Test, Limitation of Benefits Rules, and General Anti Abuse Rules. It is for quick review only, and in-depth analysis is suggested while applying for real-life cases.
Simplified Limitation of Benefit (SLOB), also known as Specific Anti-Abuse Rules, is one of the three alternative rules provided in the BEPS Action 6 Report on Preventing the tax treaty benefits in inappropriate circumstances. Simplified Limitation of Benefits is an objective test to define the normative criteria and attributes that determine whether the income recipient … Continue reading Everything about Simplified Limitation of Benefits | SLOB Test
BEPS Action 6 Report on Preventing the tax treaty benefits in inappropriate circumstances includes three alternative rules to address situations of treaty abuse. Firstly, a general anti-abuse rule (GAAR) is based on the principal purpose of transactions or arrangements. The second a simplified version of specific anti-abuse rules (SAAR), and the third a detailed version … Continue reading Principal Purpose Test | Paragraph 1 of Article 7 of MLI
Article 6 of MLI provides the preamble and purpose of the Covered Tax Agreement. BEPS Action 6 acknowledges that preamble is an essential source for interpreting treaties as the same provides clear intent or a rationale that persuaded two countries to enter into a treaty. According to the basic rule of interpretation of treaties in … Continue reading Article 6 of MLI – Purpose of Covered Tax Agreement
In a typical scenario, the State of residence has the right to tax the resident taxpayer’s global income, and the State of the Source has the right to tax the taxpayer on the income received/derived by him from the State of the Source. Accordingly, the taxpayer is subject to taxation in both the State of … Continue reading Article 5 of Multilateral Instruments | Application of Methods for Elimination of Double Taxation
Article 4 of the Multilateral instruments on the tax residency of dual resident entities