The DNA of the Principal Purpose Test in the Multilateral Instrument

• Autores: Marcus Lívio Gomes
• Localización: Intertax, ISSN 0165-2826, Vol. 47, Nº. 1, 2019, págs. 66-90
• Idioma: inglés
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• Resumen

  • This article provides a comprehensive analysis of the framework of the principal purpose test (PPT) included in the Multilateral Convention (MLI) designed by the OECD as part of the Base Erosion and Profit Shifting (BEPS) Action 6 Final Report, ‘Preventing the Granting of Treaty Benefits in Inappropriate Circumstances’, included in the BEPS Project. This article maps the primary and secondary elements generally used in a general antiavoidance rule (GAAR) to check the feasibility of these concepts in the PPT. Potential weaknesses are pointed out, as well as challenges for its legal implementation, application and interpretation. The article assesses the feasibility of the main features of the PPT as a general anti-treaty avoidance rule (GATAR) to be included in the tax treaties of the states and jurisdictions that joined the MLI. From this perspective, whether the PPT will prevent treaty abuse, treaty avoidance or aggressive tax planning without creating uncertainty and shifting too much discretionary power to tax administrations is one of the issues. Ultimately, the strengths of this provision will depend on the legislatures and courts in the near future.