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Preventing tax treaty abusemore of the relevant preparation and ultimate decisions occurin the residence State than occur elsewhere;‣ ¾ The test appears to focus on the number of decisions rather thantheir importance;‣ ¾ The test requires an examination of the decision-making forthe company claiming to be entitled to treaty benefits and any“direct and indirect subsidiaries.” Clearly, the listed companywill not be a “qualified person” under this option if it is effectivelymanaged from offshore, but the drafting suggests that the listedcompany must assume responsibility for the decision-makingof subsidiaries; relevant operational policy decisions cannotapparently be left to the executives of the operating subsidiaries.Where either the “locally traded’ or “locally managed’ test issatisfied, the listed company will enjoy access to all treaty benefits, butthe most important ones are likely to be treaty benefits for dividends,interest and royalties received from its subsidiary in the source country,and treaty benefits for income from business activities conductedin the source State without a permanent establishment (PE).Example 3State BCompany B Ltd.If Company B's shares aretraded (in State A or State B),it will be a qualified person if:- Its shares are primarilytraded in State B, or- Its primary place ofmanagement is in State B$State ACompany A Ltd.A second rule exists for companies that are subsidiaries of publiclytraded companies — that is to say, a company can be a “qualified person”if it is at least 50 per cent owned by a listed and publicly traded companythat is resident in one of the States and itself a “qualified person”:299
Graeme S. Cooper2. A resident of a Contracting State shall be a qualified personfor a taxable year if the resident is…c) a company, if…ii)at least 50 per cent of the aggregate voting power andvalue of the shares (and at least 50 per cent of anydisproportionate class of shares) in the company isowned directly or indirectly by five or fewer companiesentitled to benefits under subdivision i) of thissubparagraph, provided that, in the case of indirectownership, each intermediate owner is a resident ofeither Contracting State;The test can extend to partly owned subsidiaries and joint-venturecompanies: the test will be satisfied by tracing at least 50 per cent of theshareholding in the relevant company to one or more publicly tradedcompanies resident in either State. And the test does allow for a significantportion of the company being examined to be owned by shareholdersresident in a third State.Example 4State CCompany C Ltd.State B40 per centCompany B Ltd.B Sub Ltd.60 per centShares in Company B areactively traded on arecognized stock exchangein State BB Sub is a “qualified person”because it is more than 50per cent owned byCompany B$State ACompany A Ltd.300
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United Nations Handbookon Selected
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Copyright © June 2015United Nation
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PrefaceIn recent years, internation
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Acknowledgements(Chile); Mr. Wolfga
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IntroductionIn follow-up, the Subco
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ContentsPreface ...................
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ContentsChapter IITaxation of incom
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Contents5. Article 13 of the United
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ContentsChapter VIPreventing tax tr
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Contents4. Options for developing c
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Contents5.5 Regional agreements ...
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Hugh J. Ault and Brian J. Arnoldand
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Hugh J. Ault and Brian J. Arnold(8)
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Hugh J. Ault and Brian J. Arnoldsto
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Hugh J. Ault and Brian J. Arnoldbe
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Hugh J. Ault and Brian J. Arnoldmig
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Hugh J. Ault and Brian J. Arnold4.
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Hugh J. Ault and Brian J. Arnoldpar
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Hugh J. Ault and Brian J. Arnoldrai
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Hugh J. Ault and Brian J. Arnoldadm
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Hugh J. Ault and Brian J. Arnoldbas
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Hugh J. Ault and Brian J. Arnold‣
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Hugh J. Ault and Brian J. ArnoldGAA
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Hugh J. Ault and Brian J. Arnold7.6
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Hugh J. Ault and Brian J. Arnoldcom
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Hugh J. Ault and Brian J. Arnold8.5
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Hugh J. Ault and Brian J. Arnoldinc
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Hugh J. Ault and Brian J. Arnoldinc
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Hugh J. Ault and Brian J. Arnoldpay
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Hugh J. Ault and Brian J. ArnoldThe
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Chapter IITaxation of income from s
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Taxation of income from servicesnot
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Taxation of income from servicesin
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Taxation of income from servicespra
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Taxation of income from servicesThe
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Taxation of income from servicesof
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Taxation of income from servicesear
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Taxation of income from servicesamo
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Taxation of income from serviceswit
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Taxation of income from servicesHow
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Taxation of income from servicescou
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Taxation of income from services‣
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Taxation of income from servicestax
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Taxation of income from servicessub
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Taxation of income from servicesby
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Taxation of income from servicesemp
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Taxation of income from servicesto
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Taxation of income from servicesman
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Taxation of income from servicesthe
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Taxation of income from servicessev
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Taxation of income from servicesa n
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Taxation of income from servicesis
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Taxation of income from services‣
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Taxation of income from servicesper
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Taxation of income from serviceson
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Taxation of income from servicesthe
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Taxation of income from servicesa g
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Taxation of income from servicescou
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Taxation of income from servicespay
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Taxation of income from servicessol
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Chapter IIITaxation of non-resident
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Taxation of non-residents’ capita
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Chapter IVLimiting interest deducti
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Limiting interest deductionspartial
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Limiting interest deductionsthe pot
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Limiting interest deductionspotenti
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Limiting interest deductionsthey do
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Limiting interest deductionsissue m
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Limiting interest deductionsare in
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Limiting interest deductionsSpecifi
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Limiting interest deductions3.1.3.3
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Limiting interest deductionsas divi
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Limiting interest deductions‣ ¾
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Limiting interest deductionsconnect
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Limiting interest deductionslending
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Limiting interest deductionsOn the
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Limiting interest deductionsOECD Mo
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Limiting interest deductionsHowever
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Chapter VNeutralizing effects of hy
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Neutralizing effects of hybrid mism
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Page 283 and 284: Peter A. HarrisAnnex IIEffects of o
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Page 348 and 349: Chapter VIIPreventing avoidance of
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Preventing avoidance of permanent e
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Chapter VIIIProtecting the tax base
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Protecting the tax base in the digi
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Eric M. Zoltincentives are bad in t
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Eric M. Zoltoption, and taxes are j
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Eric M. ZoltWhile tax incentives ca
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Eric M. Zoltdisguised tax incentive
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Eric M. Zoltif the foreign investor
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Eric M. ZoltNew foreign direct inve
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Eric M. Zoltto avoid paying taxes o
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Eric M. Zoltshould be the monitorin
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Eric M. Zolt2.2 Design consideratio
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Eric M. Zoltwith the creation of a
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Eric M. Zolt2.2.1.3 Tax holidaysIn
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Eric M. ZoltInvestment allowances a
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Eric M. Zoltmechanism, investors ha
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Eric M. Zolt2.2.2.6 Transfer pricin
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Eric M. Zoltthat offers tax privile
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Eric M. Zolt6. Calculate the amount
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Eric M. ZoltFor an investor, the to
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Eric M. Zoltthe right of source cou
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Eric M. Zoltincome either when earn
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Eric M. Zolt‣ ¾ “Broad approac
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Eric M. ZoltThe insight here is tha
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Eric M. Zoltattributable to develop
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Chapter XTransparency and disclosur
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Transparency and disclosure1.4 Perv
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Transparency and disclosure2.2.2 Vo
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Transparency and disclosureis inten
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Transparency and disclosureon the O
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Transparency and disclosureand conc
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Transparency and disclosureimproved
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Transparency and disclosureenhancem
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Transparency and disclosureobservat
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Transparency and disclosurethey fac
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Diane Ringunder review. To assist i
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Diane Ring(b) Reporting oversight:
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Diane Ringpermanent establishment (
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Diane Ringparticular, may face this
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Diane Ringto tax authorities under
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Diane RingBusiness organizations, i
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Diane RingThere is, however, anothe
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Diane Ringin a jurisdiction will be
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Diane Ringbe important to bear in m
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Diane Ring3.3.6.2.3 DomesticThe pro
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Diane Ringexpertise to developing-c
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Diane Ring3.4 Disclosure of aggress
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Diane Ringdisclosure. But it is not
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Diane Ring4.2.3 ChallengesSuccessfu
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Diane RingMuch of the discussion an
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Diane Ringcase of an individual) of
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Diane Ring4.3.4.3.1 ReciprocityThe
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Diane Ring4.4 Industry-specific rep
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Diane Ringdisclosure and confidenti
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Diane Ring5.2 Article 26 of the Mod
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Diane Ring5.2.3 Information sought
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Diane RingModel Convention). The pr
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Diane Ringdetail the expectations r
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Diane Ringa position to negotiate m
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Diane Ringand disclosure regarding
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Diane Ringautomatic exchange on a n
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