Tax authorities invoke the General Anti Avoidance Rule (GAAR) to ensure that there is no tax abuse when taxpayers engage in ‘treaty shopping’, the practice of foreign residents structuring their internal transactions and operations to take advantage of particular tax treaties.
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), coming into full effect by 2020, will provide tax authorities with an additional tool – the ‘principal purpose’ test – to stop abusive treaty shopping in its tracks.
The following complimentary webinar examines a recent GAAR decision and explores the limitations of the GAAR, as well as possible applications and ramifications of the forthcoming MLI as it applies to treaty shopping.
