MFA Submits Comments to OECD on Non-Collective Investment Vehicles and Tax Treaty Benefits

On February 3, MFA submitted a comment letter to the OECD in response to its discussion draft on examples of non-collective investment vehicles related to application of the principal purpose test (PPT), part of the OECD’s BEPS Action 6 working group on treaty benefits.  In our letter, we encouraged the OECD working group to expand examples 1 and 3 to include a broader range of alternative investment funds to avoid imposing an additional layer of tax on investors that choose to invest through a pooled investment vehicle, rather than directly, in global capital markets.  To the extent the OECD working group determined to leave examples 1 and 3 to a narrower subset of investment funds, we encouraged the working group to add a fourth example for global investment funds that only receive proportional tax treaty benefits.  Finally, we continued to encourage the OECD to adopt a proportional benefits framework, in addition to any PPT framework, which we believe would promote cross border investment activities while addressing the anti-tax abuse concerns underlying the OECD BEPS project.