The main point of attention is the entry into force of the ‘principle purpose test’, according to which the tax treaty benefits should be disallowed if it reasonable to conclude that obtaining that benefit was one of the main purposes of any arrangement or transaction that resulted (in)directly in that benefit. The entry into force of the MLI will also introduce a limited amount of other, technical, changes.
Regarding Hong Kong, the entry into effect of the Covered Agreements (including with Belgium) depends on the date of notification to the OECD that the internal proceedings for the entry into effect of the MLI in Hong Kong, have been completed. Depending on the speed of such proceedings and notification thereof, it is possible that the MLI – including in particular the principle purpose test – would apply to taxable periods as of 1 January 2023. If these internal proceedings linger, or their finalization is not or only belatedly communicated to the OECD Secretariat, the MLI will not yet enter into effect regarding Hong Kong.
This development is relevant for Belgian based MNE’s with group entities and economic activities in Hong Kong as well as China.
Rik Smet – Senior Associate (firstname.lastname@example.org)
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Tiberghien’s international tax team will continue to monitor these and other tax developments relevant for Belgium / Luxembourg based multinational enterprises. Our editorial board consists of:
Koen Morbée (International and EU corporate tax, email@example.com);
Michiel Boeren (International and EU corporate tax, firstname.lastname@example.org);
Ahmed El Jilali (International and EU corporate tax, email@example.com);
Katrien Bollen (HR tax and global mobility, firstname.lastname@example.org);
Ben Plessers (Transfer Pricing and Valuations, email@example.com);
Gert Vranckx (VAT, customs, excises and other indirect taxes, firstname.lastname@example.org);
Rik Smet (International and EU corporate tax, email@example.com)
In case you have further questions on this publication or want to discuss a tax query, please do not hesitate to contact the author(s) or one of the members of the editorial board.
This newsflash is for information purposes only and cannot be relied upon as legal advice.