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TMI BlogTreaty ShoppingX X X X Extracts X X X X X X X X Extracts X X X X ..... le directly. The UN Ad Hoc Group of Experts defined the term abuse of tax treaties as the use of tax treaties by persons the treaties were not designed to benefit, in order to derive benefits that the treaty were not designed to give them. It is defined as the routing of income arising in one country to a person in another country through an intermediary country to obtain an unintended tax ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hholding tax rate in State Z if paid to State C Resident than if paid to State Y resident. Stepping stone conduit A stepping stone conduit works as follows: Residents of State Y establish company resident in State C where it is fully subject to tax on income derived from Z. However, it pays high interest, royalties, service fees, commissions other expenses to a second related f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wning an important shareholding in Indian company may emigrate to Belgium in view of later sale of shares because under Article 18 of Belgium-France tax treaty the right to tax the capital gain is conferred to Belgium but Belgium does not levy capital gains tax on individuals (except speculation). There are four main categories of anti-treaty shopping measures currently in use: Neutral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax treaties in cases of circular situations when the income is sourced in the same country where the shareholder is resident, but the income passes through a company resident in another country for tax reasons, i.e., round tripping . This has been considered abusive by India, Brazil, Indonesia, etc. - Manuals - Ready reckoner - Law and practice - Reference Guide - Quick Commentary Tax Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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