Tax Effects of Treaty Shopping and OECD’s BEPS Implications

Abstract

This article evaluates the reasons as to why tax treaty abuse and specifically treaty shopping have been less mooted in the international tax landscape, before the experience of the global economic slowdown. Dawn of the 21st century witnessed the international community be much intensively focused on global transparency in tax matters, and nations more concerned about the revenue loss due to tax avoidance methods adopted globally. Further, the article tries to make a logical connection between the treaty shopping, tax avoidance and tax evasion, without getting deeply into the technicalities of Limitation on Benefits and Principal Purposes Test rules proposed by OECD in BEPS Action Plan 6.