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Neutralizing effects of hybrid mismatch arrangementsA.3.3 Figure 10 in the OECD Public Discussion Draft on BEPS Action2 — Domestic Issues is of a similar nature and does involve a paymentby a PE, but here the payment is to a recipient that is part of the samegroup of companies as the owner of the PE. Here the domestic law ofthe owner of the PE also disregards the payment by the PE, but thistime by reason of a rule disregarding transactions between membersof a corporate group. The analysis is similar to that for example 11. Asin that example, because there is an actual payment made by the ownerof the PE (through the PE), the host State can impose withholding tax(and should do so), subject to any limits in tax treaties.A.3.4 Figure 6 [figure 3.1 in the OECD Action 2 — 2014 Deliverable]in the OECD Public Discussion Draft on BEPS Action 2 — DomesticIssues involves a mismatch in identification of a person that causes amismatch regarding who owes a liability and therefore who makes apayment. The consequences are similar to those in example 3 and themismatch would largely be addressed as discussed above with respectto that example, for instance, by quarantining of foreign expenses.A.3.5 Figure 7 in the OECD Public Discussion Draft on BEPSAction 2 — Domestic Issues is similar, but involves a mismatch inidentifying a PE as a separate income tax calculation entity. As discussedabove with respect to figure 9 [figure 2.3 in the OECD Action2 — 2014 Deliverable], this mismatch arises under the OECD ModelConvention as a result of the Authorised OECD Approach underArticle 7 (2). Again, the consequences in figure 7 are similar to thosein example 3 and the mismatch would largely be addressed as discussedabove with respect to that example, for example, by quarantiningforeign expenses.A.3.6 Figure 11 [figure 2.4 in the OECD Action 2 — 2014 Deliverable]in the OECD Public Discussion Draft on BEPS Action 2 involvesa mismatch in identification of a person that causes a mismatch asregards who owns an asset (loan) and therefore who receives a payment.Even though this example involves three countries, the consequencesare similar to those in example 2 and the mismatch wouldlargely be addressed as discussed above with respect to that example,for instance, by comprehensive withholding in the State of the payerand CFC rules in the State of the ultimate investor.269