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Searching for the Uncertain Rationale Underlying the US Treasury's Anti-Treaty Shopping Policy

40 Intertax, Issue 4, page 245, 2012

11 Pages Posted: 22 Aug 2012  

J. Clifton Fleming Jr.

Brigham Young University - J. Reuben Clark Law School

Date Written: April 2012

Abstract

The US Treasury Department regards treaty shopping as an abuse of its bilateral income tax treaty network and has developed a model anti-treaty shopping article which it insists on including in all of its income tax treaties. Treasury has explained that its position is based on the rationale that treaty shopping inappropriately benefits residents of countries that have not "paid" for treaty advantages by making reciprocal concessions to the United States and that successful treaty shopping lessens the incentive for other countries to enter into treaty negotiations with United States. This article examines the exceptions to the US anti-treaty shopping article and finds that, because these exceptions are significantly inconsistent with Treasury's announced anti-treaty shopping rationale, Treasury's true rationale is uncertain and its model anti-treaty shopping article is, in fact, vulnerable to substantial treaty shopping behavior.

Keywords: international taxation, income tax treaties, international business, international law

Suggested Citation

Fleming, J. Clifton, Searching for the Uncertain Rationale Underlying the US Treasury's Anti-Treaty Shopping Policy (April 2012). 40 Intertax, Issue 4, page 245, 2012. Available at SSRN: https://ssrn.com/abstract=2133616

J. Clifton Fleming (Contact Author)

Brigham Young University - J. Reuben Clark Law School ( email )

430 JRCB
Brigham Young University
Provo, UT 84602
United States

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