The International Application and Development Prospect of the Principle Purpose Test Clause
DOI:
https://doi.org/10.54097/hbem.v16i.10597Keywords:
Principle purpose test; Abuse of tax treaties; MLI.Abstract
Abuse of tax treaties by taxpayers through various means has become increasingly rampant, infringing on the tax base of each country. The OECD has formulated the PPT rule in order to protect global tax order. The main content of the rule is: a tax benefit shall not be granted if obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit. The PPT rule is favored by countries for its simplicity, and it gradually developed into one of the most important rules in the anti-abuse system. However, there are many problems in the current application of the rule. This paper begins with a description of the concept of the PPT rule and three points of contention, followed by an analysis of the application of the PPT rule in the domestic laws of four countries and the problems that exist globally. Finally, this paper puts forward three recommendations that are relevant to the future development of the PPT rule.
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