Preventing Tax Arbitrage via Hybrid Mismatches: BEPS Action 2 and Developing Countries

48 Pages Posted: 28 Mar 2017 Last revised: 4 Apr 2017

Blazej Kuzniacki

Tax Academy Centre for Excellence in Taxation

Alessandro Turina

Bocconi University

Thomas Dubut

Université Paris I Panthéon-Sorbonne - Sorbonne Law School

Addy Mazz

Universidad de la República

Natalia Quiñones

Independent

Luis Eduardo Schoueri

University of Sao Paulo (USP)

Craig West

University of Cape Town (UCT); International Bureau for Fiscal Documentation (IBFD)

Pasquale Pistone

Vienna University of Economics and Business

Frederik Zimmer

University of Oslo

Date Written: February 27, 2017

Abstract

The Organization for Economic Cooperation and Development (OECD) under Base Erosion and Profit Shifting (BEPS) Action 2 indicated that tax arbitrage via hybrid mismatch arrangements “result in a substantial erosion of the taxable bases of the countries concerned” and “have an overall negative impact on competition, efficiency, transparency and fairness.” The relevant action allowing for neutralising the effects of hybrid mismatch arrangements is therefore needed and justified. To achieve that purpose, the OECD developed different anti-hybrid rules under BEPS Action 2. In that regard, however, one may ask whether addressing tax arbitrage via hybrid mismatches as proposed by the OECD is of interest and relevance for developing countries. This paper aims to map that unexplored research area by means of a comparative analysis in four developing countries – Uruguay, Colombia, Brazil, and South Africa.

Keywords: Hybrids, BEPS, Action Item 2, Mismatch, Developing Countries, Tax Arbitrage, Tax Governance, Sustainability

JEL Classification: K33, K34, E62, E63, F62, H26, O23

Suggested Citation

Kuzniacki, Blazej and Turina, Alessandro and Dubut, Thomas and Mazz, Addy and Quiñones, Natalia and Schoueri, Luis Eduardo and West, Craig and Pistone, Pasquale and Zimmer, Frederik, Preventing Tax Arbitrage via Hybrid Mismatches: BEPS Action 2 and Developing Countries (February 27, 2017). WU International Taxation Research Paper Series No. 2017-03. Available at SSRN: https://ssrn.com/abstract=2941617

Blazej Kuzniacki (Contact Author)

Tax Academy Centre for Excellence in Taxation ( email )

60 Stamford Road
Singapore 178900
Singapore

HOME PAGE: http://https://accountancy.smu.edu.sg/cet/home-page-content

Alessandro Turina

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Thomas Dubut

Université Paris I Panthéon-Sorbonne - Sorbonne Law School ( email )

12 Place du Panthéon
Paris, 75005
France

Addy Mazz

Universidad de la República

Avenida 18 de Julio 182
Montevideo, 11100
Uruguay

Natalia Quiñones

Independent ( email )

No Address Available

Luis Eduardo Schoueri

University of Sao Paulo (USP) ( email )

Rua Luciano Gualberto, 315
São Paulo, São Paulo 14800-901
Brazil

Craig West

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, 7701
South Africa

HOME PAGE: http://www.tax.uct.ac.za/aprof-craig-west

International Bureau for Fiscal Documentation (IBFD) ( email )

Rietlandpark 301
Amsterdam, 1019 DW
Netherlands

HOME PAGE: http://www.ibfd.org/IBFD-Profiles/Craig-West

Pasquale Pistone

Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, Wien 1020
Austria

Frederik Zimmer

University of Oslo ( email )

PO Box 6706 St Olavs plass
Oslo, N-0317
Norway

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