Tom Scott (McDermott Will & Emery) looks at hybrid arrangements and the effect of the OECD proposals.
The three main areas of
focus of the OECD BEPS exercise are coherence substance and transparency. The hybrid proposals primarily address coherence; namely base erosion which relies on mismatches or ‘black holes’ between different tax systems. The first major economy to propose the domestic introduction of the OECD hybrid rules is the UK. This article outlines these rules and the reasons for them looks at their likely impact and highlights the shifts they will generate in the conventional thinking of MNEs and their advisers.
The OECD/G20 final report of 2015 Neutralising the effects of hybrid mismatch arrangements (‘the report’) neatly summarises why the proposals are needed:
‘Hybrid mismatch arrangements exploit...
