OECD Lays Out BEPS Action 6 Peer Review Criteria | KPMG | CA
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OECD Lays Out BEPS Action 6 Peer Review Criteria

OECD Lays Out BEPS Action 6 Peer Review Criteria

The OECD published the terms and methodology it will use in BEPS Action 6 peer reviews.


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The OECD's Peer Review Documents, which was published on May 30, 2017, will form the basis of the new peer review process. The document includes criteria for assessing how the BEPS Action 6 minimum standard is being implemented and the procedural mechanism by which peer reviews will be conducted. BEPS Action 6 is intended to prevent corporations from being inappropriately allowed treaty benefits and countries are subject to peer review to make sure that Action 6 is implemented accurately and within a reasonable time.

Action 6 of the BEPS Action Plan identified treaty abuse, and in particular treaty shopping, as one of the most important issues related to the BEPS project.

The OECD recommends a minimum standard of protection against treaty shopping that countries should agree to include in their treaties. The commitment to this minimum standard will require countries to include in their tax treaties a clear statement that their common intention is to eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance. The OECD recommends that this common intention be including in tax treaties by:

  • The combined approach of a Limitations on Benefits provision (LOB rule) and a "principal purposes test" (PPT rule), or 
  • The PPT alone, or 
  • The LOB rule supplemented by a mechanism that would deal with conduit financing arrangements (relevant for dividends, interest and royalties).

The multilateral instrument, which was signed on June 7 by 68 countries, gives tax jurisdictions options for how they can choose to implement the minimum standard for preventing treaty abuse, without the need for bilateral negotiations. Canada has committed to the PPT to address treaty abuse (see TaxNewsFlash-Canada 2017-33, "Canada Signs on for BEPS Treaty Changes").

For more information, contact your KPMG adviser.

Information is current to June 20, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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