The OECD has released a new report addressing issues not directly considered in its 2015 report on hybrid mismatches (BEPS Action 2). This latest report looks at the effects of different treatment of branch structures between jurisdictions, which can produce similar mismatches to those targeted by the 2015 report. The new report recommends:
limiting the scope of any existing branch exemption rules;
eliminating deduction/non-inclusion mismatches arising due to differences in the allocation of payments, or through a payment being made to a disregarded branch;
denial of a deduction for deemed branch payments where these would otherwise be offset against non-dual inclusion income;
only allowing double deductions to the extent that there is dual inclusion income in a current or subsequent period; and
The OECD has released a new report addressing issues not directly considered in its 2015 report on hybrid mismatches (BEPS Action 2). This latest report looks at the effects of different treatment of branch structures between jurisdictions, which can produce similar mismatches to those targeted by the 2015 report. The new report recommends:
limiting the scope of any existing branch exemption rules;
eliminating deduction/non-inclusion mismatches arising due to differences in the allocation of payments, or through a payment being made to a disregarded branch;
denial of a deduction for deemed branch payments where these would otherwise be offset against non-dual inclusion income;
only allowing double deductions to the extent that there is dual inclusion income in a current or subsequent period; and
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