The Taxation of Offshore Indirect Transfers

We have made a submission to the Platform for Collaboration on Tax’s consultation on the revised version of its proposed Toolkit on this subject. Our submission, available here, restates and reinforces the argument that the Toolkit should not be tied to the archaic legalistic distinction between immovable and movable assets, but should include the transfer of a business as a going concern, treated as transferring location-specific assets.


We supported the first version of this report, while making some suggestions for its strengthening. Due to critical comments from commentators, many of whom make use of or advise on indirect transfers as tax efficient exit strategies, this revised version has been weakened such that it is less clear and would be less useful for the many developing countries, and some developed countries, which would benefit.

The case studies this revised version includes from developing countries, as well as one which we contribute in this submission, show that the problem concerns avoidance of host country taxation of the capital gains from the transfer of control over a local business as a going concern. The economic analysis presented in this draft provides clear support for the host country’s right to tax the gains (economic rents) deriving from location-specific assets and activities. The legalistic distinction between immovable and moveable assets is archaic and unhelpful, and we recommend a further rewriting of the paper to foreground and develop the economic analysis and redraft the legal advice to ensure that host countries which wish to do so can effectively tax the capital gains from the transfer of control over local business activities.

BEPS Monitoring GroupComment