Sovereign Wealth and Superannuation Funds Lobby OECD for Tax Exemption
The Organization for Economic Co-operation and Development (OECD) is attempting to limit multinational tax avoidance and offshore tax evasion by having created the base erosion and profit sharing (BEPS) project. A 15-point action plan on BEPS has been developed and tax reform could take effect on January 1, 2017. The political momentum for adopting all the BEPS action points has garnered significant steam. This noble effort to rein in tax avoiders could have unintended consequences for pensions and public funds. Public funds are concerned of the proposed application of the Principal Purpose Test (PPT) and Limitation on Benefit (LOB) rules. Lobbying groups argue that the risk of treaty abuse by sovereign funds and pensions is low. Superannuation funds and sovereign wealth funds from Australia and New Zealand are carefully urging the OECD to exclude their investor class from new rules that target BEPS.
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