Critical analysis of the Principal Purpose Test and the Limitation on Benefits Rule a world divided but It takes two to tango Ameya Mithe Electrónico
By: Mithe, Ameya
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Material type: 
ArticlePublisher: 2020Subject(s): FISCALIDAD INTERNACIONAL | ABUSO DE TRATADOS | CLÁUSULA DEL PROPÓSITO PRINCIPAL | LIMITACIÓN DE BENEFICIOS | CONVENIO MULTILATERAL
In:
World Tax Journal v. 12, n. 1, 2020Summary: This article focuses on the principal purpose test (PPT) and the limitation on benefits (LOB) provision as two divergent treaty anti-abuse measures presented by BEPS Action 6 and the Multilateral Instrument (MLI). It first traces the evolution of both these measures. Thereafter, it discusses the diverse interpretations of the PPT and studies the double-step application of the LOB in light of the US approach and comments on the merit of a standalone application of each measure as opposed to their combined application in a treaty. The article subsequently observes that while Action 6 recommended a combined application of both measures, the country choices in the MLI show a polarized global implementation of these measures. Most countries (the European Union being at the forefront) prefer a standalone application of the PPT (without the LOB), while the US rejects the PPT and continues to exclusively apply the LOB provision. Lastly, the author proposes a solution to bridge this global divide.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| Recursos electrónicos | IEF | IEF | WTJ/2020/1-1 (Browse shelf) | Available | WTJ/2020/1-1 |
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Resumen.
This article focuses on the principal purpose test (PPT) and the limitation on benefits (LOB) provision as two divergent treaty anti-abuse measures presented by BEPS Action 6 and the Multilateral Instrument (MLI). It first traces the evolution of both these measures. Thereafter, it discusses the diverse interpretations of the PPT and studies the double-step application of the LOB in light of the US approach and comments on the merit of a standalone application of each measure as opposed to their combined application in a treaty. The article subsequently observes that while Action 6 recommended a combined application of both measures, the country choices in the MLI show a polarized global implementation of these measures. Most countries (the European Union being at the forefront) prefer a standalone application of the PPT (without the LOB), while the US rejects the PPT and continues to exclusively apply the LOB provision. Lastly, the author proposes a solution to bridge this global divide.
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