OECD Releases Discussion Drafts On Hybrid Mismatch Arrangements

In July 2013, the Organisation for Economic Co-operation and Development (OECD) released its Action Plan on Base Erosion and Profit Shifting (the BEPS Action Plan). The BEPS Action Plan identified hybrid mismatch arrangements as a source of base erosion and profit shifting concern (Action 2). (For further details on the BEPS Action Plan see our Osler Update, July 19, 2013.)

On March 19, 2014, the OECD released two draft discussion papers that present proposals for neutralizing the effects of hybrid mismatch arrangements. The first makes recommendations for domestic law changes (First Discussion Draft). The second addresses OECD model treaty considerations (Second Discussion Draft). Comments on the discussion drafts are being accepted until May 2, 2014.