The below Parliamentary question was asked by Oliver Colvile on 2016-10-19.
To ask Mr Chancellor of the Exchequer, what his Department’s policy is on the inclusion of anti-abuse clauses in the UK-Malawi tax treaty to prevent tax avoidance through treaty shopping.
Jane Ellison
As is usual in any negotiation, the text of a tax treaty remains confidential between the two governments during the negotiations. It is not therefore possible to comment on the contents of a treaty before it is signed.
The majority of the UK’s double taxation treaties are based on the OECD Model Double Taxation Convention. However, some developing countries prefer to follow the United Nations Model, whose provisions differ in some respects from the OECD Model, including in the “permanent establishment” article. Many of the UK’s treaties with developing countries contain at least some of these provisions. A treaty will be signed only when both governments are satisfied with its contents.
It has long been the UK’s policy to include robust anti-abuse provisions in its tax treaties to ensure that they operate as intended and in particular that residents of third countries cannot indirectly benefit from their provisions.
The text of the new treaty with Malawi was substantively agreed some time ago. However, in August 2016 Malawi raised some further points for consideration, which we will work together on. When that process is complete, and both countries are satisfied with contents of the new treaty, it will be signed and published. Parliament will scrutinise the revised agreement, as part of the affirmative Statutory Instruments procedures, before the treaty can enter into force.
