Tax In History: CFCs and Tax Treaties: Historical Elements for the IIR Debate

Abstract

This article revisits the OECD Commentary’s position on the compatibility of CFC rules and tax treaties from a historical perspective. It highlights that the key (technical) argument behind the compatibility endorsed by the Commentary rests on the anti-abuse character of the rule. This backdrop is of relevance for the analysis of rules that purport to have a similar mechanism but that lack the anti-abuse character – including worldwide income taxation rules and the Income Inclusion Rule (IIR) under Pillar 2. The article posits that these situations are beyond the scope of the ‘technical argument’ and, therefore, cannot rely on the OECD Commentary to support their compatibility with tax treaties. Controlled foreign corporation rules, tax treaties, income inclusion rule, worldwide taxation