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The Meaning of 'Beneficial Owner' - Part II

The Meaning of 'Beneficial Owner' - Part II
19 Dec 2012
On 29 April 2011, the OECD released a public discussion draft entitled “Clarification of the meaning of ‘beneficial owner’ in the OECD Model Tax Convention”.

In light of the comments received on that first discussion draft , the OECD Committee of Fiscal Affairs, through its Working Party 1 on Tax Conventions and Related Questions, made a number of changes to the proposals released in April 2011.

Taxand previously provided comments on the first discussion draft as above - our comments at the time focussed on our concern that a broad definition of a beneficial owner may result in additional uncertainties for taxpayers instead of achieving the goal of the OECD to promote certainty in international tax matters. We also asked for more real life and concrete examples to clarify the wording of the discussion draft.

In Taxand's response to this revised draft, our comments include:

  • Opinion on the revised clarifications provided
  • Commentary on the term "beneficial owner"
  • Comments on the proposed wording for "obligation to pass on the payment"
  • Movement of the "obligation to pass on the payment" debate
  • Clarity of the terms "related" and "unrelated" in the context of payments
  • Potential consequences of revised clarifications
  • Whether these multiple clarification provide simplicity
  • Content to be considered for exclusion - recommendations for the OECD

Access Taxand's full response to the OECD's revised discussion draft on the clarification of the meaning of the term "beneficial owner" 

Your Taxand contact for further queries is:
Marc Sanders
T. + 31 207 570 905

Taxand's Take

International companies need to deal with complex international and domestic tax rules. In the current economic climate, businesses are under increasing scrutiny over their tax structures. Therefore, it is more important than ever to provide clarity and guidance regarding the rules that these companies must adhere to. The term ”beneficial owner” is a very important element which companies need to consider in their day to day operations.  As a result, it would be unfortunate if the OECD accepts or settles for rules or guidance that leaves uncertainty about the definition of this key term.