See Katanga Decision on Regulation 55, supra note 6, [paragraph] 26 ("The recharacterisation .
arguing that "in giving notice of their intention to consider a recharacterisation within the meaning of regulation 55," the Trial Chamber should "provide at the same time adequate information as to the factual and legal scope of that change").
Alternatively, does the PPSA, in its recharacterisation
of the transaction as a security interest, have the consequence that the transferor retains some form of interest in the account?
On February 6, 2015, TEI submitted comments to the OECD regarding its BEPS public discussion draft entitled BEPS Actions 8,9 and 10: Revisions to Chapter I of the Transfer Pricing Guidelines (Including Risk, Recharacterisation, and Special Measures).
Pursuant to Actions 8-10 of the Plan, on December 1, 2014 the OECD published a public discussion draft entitled BEPS Actions 8, 9, and 10: Discussion Draft on Revisions to Chapter I of the Transfer Pricing Guidelines (Including Risk, Recharacterisation, and Special Measures) (hereinafter the Discussion Draft or Draft).
With respect to the example in paragraph 6 of the Discussion Draft, it is TEI's view that the example does not properly illustrate the OECD's message regarding non-recognition/ recharacterisation.
While the Discussion Draft takes pains to note that a transaction engaged in by associated enterprises that does not, or only very rarely, occurs between unrelated parties, should not be recharacterised for that reason, the Draft nevertheless conveys the message that unusual transactions or business models may be evidence of tax avoidance schemes subject to recharacterisation.
We also note that the modifications proposed in Options I and J potentially go beyond the changes to the PE definition and reach into other areas, such as recharacterisation
of contracts and business structures that may be considered abusive and transfer pricing issues between related entities.
TEI commends the OECD for producing targeted rules that are generally precise, which is preferred to a recharacterisation
approach or an anti-abuse rule.
Further, the OECD's Business Restructuring Project extensively addressed the question of recharacterisation
and resulted in paragraphs 9.
fails to provide an analytical framework through which taxpayers may determine (and their financial statement auditors may confirm) whether the restructuring (or post-restructuring controlled transactions) will be safe from recharacterisation or adjustments; and
Recharacterisation or Non-Recognition of Restructuring Transactions