Oracle NetSuite HR Optimizer Invitation

Domestic and International Anti Abuse Rules

12/19/2022
 Oracle NetSuite HR Optimizer Invitation

Anti-abuse rules aim to combat the abuse of tax laws and treaties in order to prevent taxpayers from obtaining a tax position otherwise inconsistent with the intent of the law or treaty. In this regard, domestic tax laws often include a General Anti Abuse Rule (“GAAR”), while BEPS Action 6 outlines the anti abuse measures in relation to tax treaties. On this note, Federal Decree-Law No. 47 of 2022 (“UAE CT Law”) includes a GAAR provision in Article 50.

Particular

GAAR - Article 50 of the UAE CT Law

BEPS Action Plan 6 - Prevention of Tax Treaty Abuse  

Why?

·        To prevent the taxpayers from obtaining unfair tax advantages

·        To prevent the granting of treaty benefits in inappropriate circumstances

When?

·        Absence of valid commercial substance

·        Absence of non fiscal reasons reflecting economic reality 

·        Main purpose to obtain a Corporate Tax advantage that is not consistent with the intention or purpose of this Decree-Law

·        Treaty shopping

·        Double non-taxation

·        Main purpose to indirectly access the benefits of a tax treaty between two jurisdictions without being a resident of one of those jurisdictions

What is the impact?

 

·        Authority will assess the GAAR applicability on any transaction or arrangement of the taxpayer

·        Tax authorities can make adjustments to the tax liability for any unfair tax advantage obtained

·        Taxpayers engaged in treaty abuse strategies undermine tax sovereignty by claiming treaty benefits in situations where these benefits were not intended to be granted

·        Tax authorities can apply the Principal Purpose Test (“PPT”) or the Limitation of Benefit (“LoB”)

 

Impacted Areas:

The below mentioned arrangements can attract the attention of Authorities.  

·        Business modelling

·        Business restructuring

·        Financing arrangements

·        Related party transactions 

·        International transactions

·        Sham transactions

·        Unlawful accounting adjustments

How can Crowe help?

      Identify gaps between the existing arrangements and advise of the remedial measures to ensure compliance with the law.

      Advising on the documentation to be maintained to support any future inquiries from the authorities.

      Advising on any business restructuring or arrangements from the GAAR perspective.

Contact Us

Markus Susilo
Markus Susilo
Partner, Tax Advisory
Alessandro Valente
Alessandro Valente
Director - International Tax Service & Transfer Pricing