Tackling non-taxation: harmonisation vs linking rules
23 May 2012
Tax authorities are increasingly engaging with one another to fight double non-taxation, and as the European Commission’s consultation on the issue closes next week, there is debate over the best approach to adopt.
Senior tax officials from OECD member countries met in Canada this month to discuss the most effective methods of combating double non-taxation arising from hybrid mismatch arrangements, and there was broad consensus that the use of so-called linking rules is the most realistic approach.
In its Hybrid Mismatch Arrangements report, endorsed by all 34 member countries, the OECD advocates the introduction – or revision of existing – targeted rules denying tax benefits in certain cases of hybrid mismatch arrangements as one of the most important tools to address unintended non-taxation.
Achim Pross, of the OECD’s Centre for Tax Policy and Administration, said linking rules, which have already been adopted in a number of countries such as Denmark and the UK, link the tax treatment of an instrument, entity or transfer with the tax treatment in the other country, therefore avoiding at...
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