(May 21, 2015)
Already on May 20, 2015 the U.S. Department of the Treasury released what it calls Select Draft Provisions of the U.S. Model Income Tax Convention.
The U.S. Model Income Tax Convention (the “U.S. Model”) is the baseline text used by the Treasury Department when it negotiates tax treaties with other States.
According to a press released issued by the U.S. Department of the Treasury one set of draft provisions address issues arising from so-called “special tax regimes,” which provide very low rates of taxation in certain countries in particular to mobile income, such as royalties and interest. According to the press release the second set of draft provisions is intended to reduce the tax benefits from a corporate inversion by imposing full withholding taxes on key payments such as dividends and base stripping payments, including interest and royalties, made by U.S. companies that are “expatriated entities” as defined under the Internal Revenue Code.
The press release also states that while not among the draft treaty provisions that were released, the Treasury Department intends to include in the next U.S. Model a new Article to resolve disputes between tax authorities through mandatory binding arbitration.
The U.S. Department of the Treasury states that it invites comments on the proposed treaty rules. Unfortunately we were not able find a date by which the U.S. Department of the Treasury wants to receive comments.
The proposed revisions that were released can be found here. (The website of the U.S. Department of the Treasury will open in a new window)
The document: “Proposed Treaty Rule Addressing So-Called "Exempt Permanent Establishments" (5-20-2015)” contains a proposal for a new Paragraph 7 for Article 1 (General Scope).
The document: “Proposed Treasury Rules Addressing Payment by "Expatriated Entities" (5-20-2015)” contains proposals for a new Paragraph 9 for Article 10 (Dividends), a new subparagraph 2(d) for Article 11 (Interest) and a new subparagraph 5(b) for Article 12 (Royalties).
The document: “Proposed Treaty Rules Addressing "Special Tax Regimes" (5-20-2015)” contains proposals for a new Paragraph 1(l) for Article 3 providing a definition of “Special Tax Regime”, a new Paragraph 2(c) for Article 11 (Interest), A new paragraph 5(a) for Article 12 (Royalties) and a new paragraph 3(a) for Article 21 (Other income).
The document: “Proposed Limitation on Benefits Article (5-20-2015)” contains a proposal for a new Article 22 (Limitation on Benefits).
The document: “Proposed Article Addressing Subsequent Changes in Law (5-20-2015)” contains a proposal for a new Article 28 (Subsequent Changes in Law).
For further information click here to be forwarded to the press release as published on the website of the U.S. Department of the Treasury in this respect.
Copyright – internationaltaxplaza.info
Stay informed: Subscribe to International Tax Plaza’s Newsletter!
and
Follow International Tax Plaza on Twitter (@IntTaxPlaza)
