handbook-tb

Graeme S. CooperCo-operation and Development (OECD) on the impact of the projectto deal with base erosion and profit shifting (BEPS) in low incomecountries 2 lists treaty abuse as one of the high priority action itemsfor developing countries, noting concerns from Zambia and Mongolia.The present chapter is about how developing countries can protecttheir domestic tax base against erosion arising from the abuse of thetax treaties they have negotiated or are pursuing.1.1 OECD Action Plan on BEPS (July 2013)Action 6 in the OECD Action Plan on Base Erosion and Profit Shifting(OECD Action Plan on BEPS) refers to the ways in which taxpayers canabuse a country’s network of tax treaties and mechanisms designed tocounter this behaviour. Action 6 requires the OECD to:Develop model treaty provisions and recommendations regardingthe design of domestic rules to prevent the granting of treatybenefits in inappropriate circumstances. Work will also be doneto clarify that tax treaties are not intended to be used to generatedouble non-taxation and to identify the tax policy considerationsthat, in general, countries should consider before decidingto enter into a tax treaty with another country. The work will becoordinated with the work on hybrids. 3This Action, as originally presented in 2013, covers three distinctthemes:‣ ¾ Developing recommendations to prevent inappropriate accessby taxpayers to a country’s tax treaty network. These recommendationswill involve both changes to the text of theOrganisation for Economic Co-operation and Development2Organisation for Economic Co-operation and Development, Part 1 ofa Report to G20 Development Working Group on the Impact of BEPS in LowIncome Countries (Paris: OECD, 2014), available at http://www.oecd.org/tax/part-1-of-report-to-g20-dwg-on-the-impact-of-beps-in-low-incomecountries.pdf.3OECD, Action Plan on Base Erosion and Profit Shifting (Paris: OECD,2013), available at http://www.oecd.org/ctp/BEPSActionPlan.pdf.276