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Neutralizing effects of hybrid mismatch arrangementsThe second OECD example (figure 10) demonstrates that theerosion of the separate identity of corporate group members resultingfrom group regimes can give rise to the same style of mismatch. 53This is most obvious where a country adopts a consolidation regimethat removes the separate identity of a group member. However, otherforms of group relief can produce similar results, the critical featurebeing the ability to have a transaction between two group companiesignored or its tax consequences deferred.A third OECD example (figure 8) demonstrates a differentpoint. 54 This example is similar to example 13 and involves a dual residentcompany and the dual use of deductions/losses. A similar resultcan be achieved with a PE, as in figure 7. These examples involve nodisagreement between the countries in the fundamental features of apayment. Both countries agree as to who made the payment and eventhat the payment made is attributable to activities in Country B. Thefundamental problem in these cases is what tax treaties and foreign taxrelief do not deal with.Tax treaties and foreign tax relief deal only with positive taxresults and seek to ensure that the same amount of income is not subjectedto tax twice. This is most clear in the obligation of the residenceState to provide foreign tax relief. 55 However, tax treaties and foreigntax relief are not symmetrical. In the context of negative results (deductions,losses, payment of foreign tax), there is no attempt to ensure thatthe benefit of the negative result is not duplicated in the source (host)and residence (investor) States, although domestic law can prevent this.This duplication is precisely what is taking place in OECD figure 7.A symmetrical approach would be if the residence country defersto the tax consequences in the source State where income is taxable in53OECD Public Discussion Draft on BEPS Action 2 — Domestic Issues,supra note 2, 49. The OECD Action 2 — 2014 Deliverable does not reproducefigure 10.54Ibid., note 2, 47. Figure 3.2 in OECD Action 2 — 2014 Deliverable,supra note 2, 55, illustrates the same example.55Of course, the removal of double taxation is far from perfect. See, generally,Peter A. Harris, “Taxation of residents on foreign source income,” inUnited Nations Handbook on Selected Issues in Administration of Double TaxTreaties for Developing Countries, supra note 11.221