How LATAM’s Principal Purpose Tests Impact Holding Companies

As the implementation of the BEPS 2.0 GloBE provisions continues to progress this year, many Inclusive Framework members are also continuing to advance the minimum standards from BEPS 1.0. Among these standards is the adoption of anti-treaty shopping measures, such as the principal purpose test (PPT) or limitation on benefits (LOB) provisions in bilateral income tax treaties (OECD (2019), Model Tax Convention on Income and on Capital 2017 (Full Version), Article 29, OECD Publishing, Paris). With the increasing adoption and enforcement of these tax treaty-related measures, testing the availability of treaty benefits for holding companies will become more complex. ...