Traditional treaty principles that allocate taxing rights between residence and source states which have long formed the cornerstone of international tax consensus are undergoing rapid re-evaluation. Debate is driven by digital economy challenges identified in BEPS Action 1. Action 6 proposes changes to deny treaty benefits in circumstances now regarded as inappropriate. Action 2 contains treaty changes to eliminate double reliefs from hybrid instruments and entities. Action 7 changes the definition of permanent establishment to prevent the avoidance of PE status as presently defined. A multilateral instrument proposed in Action 15 will allow collective implementation of BEPS treaty measures
