| Asian Tax and Advisory Webcast Series Worldwide tax summaries 2011/12 |  Issue 24, Jun 2011
Beneficial ownership: challenge to crossborder investmentThis issue begins with a lead article that discusses the concept of "beneficial ownership" and its application in a treaty context. With investment increasing in the region and the common use of multi-tier investment structure by businesses to manage their global tax exposure, tax authorities in many of the jurisdictions in the region are closely scrutinising the use of conduit companies, which have little commercial substance but are merely created for the purpose of obtaining a treaty benefit.
The article looks at how "beneficial ownership" is being interpreted by the tax authorities in a number of countries in the region and how such a concept is being applied by these tax authorities in their fight against treaty abuse. The article also looks at the interaction between the beneficial ownership requirement in a treaty and the general anti-avoidance provisions in the domestic law as an effective tool for tax authorities to limit or deny treaty benefits. Multinational companies need to be mindful that commercial substance has become a key requirement under international taxation practice in order for taxpayers to enjoy treaty benefits and thorough consideration should be given to the business purpose and commercial justification of setting up an intermediate holding company at the outset. |
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Territory newsThis issue of Asia Pacific Tax Notes also has the usual round-up of tax developments in the region (with the exception of Japan as the deliberation and approval of the 2011 tax reform plan by the Japanese Diet has been postponed this year). They mainly focus on recent budgetary developments, as well as measures and incentives introduced by governments to achieve sustainable economic growth.
PDF extracts of this issue:
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