The abusive conduct of Treaty Shopping: OECD's view and countermeasures.

The central aim of this thesis is to analyze the practice of treaty shopping over time, focusing on how the OECD has approached the phenomenon, the countermeasures adopted to discourage it, and what influence the United States has had on the OECD’s approach. Since the OECD Model Convention is the primary framework under which most tax treaties are negotiated, particular emphasis will be given to how the model has evolved in its reaction to treaty shopping. It begins with the 1963 OECD Model Convention draft, which had no mention whatsoever of treaty shopping. It then examines the 1977 revision, wherein the concept of beneficial ownership was inserted, and then the 2003 edition, in which the Limitation on Benefits (LOB) article was inserted, originally developed in the United States. The final major development discussed is the Base Erosion and Profit Shifting Project (BEPS Project) whereby the OECD placed the battle against tax avoidance a priority. It led to the adoption of four minimum standards that must be followed by contracting states in their tax treaties, the most relevant for this study being Action 6, which is fighting against treaty abuse. The thesis also discusses the Multilateral Instrument (MLI) and leading anti-abuse instruments such as the Principal Purpose Test (PPT) that was introduced by the 2017 revision of the OECD Model. Although legal in nature, this thesis approaches the topic with a strong economic perspective, emphasizing that treaty abuse, primarily committed by large multinational corporations, results in significant revenue losses for many countries. This economic consequence is one of the primary reasons for which the OECD has adopted its commitment to counteract such activities.