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International - Conceptual Aspects of Beneficial Ownership in the Context of Property Law

Country:
International,OECD
Author:
S. Jain; J. Prebble
Issue:
Bulletin for International Taxation, 2018 (Volume 72), No 10
Published:
12 July 2018
This article argues that the dominion test cannot logically be transposed to conduit company cases from cases involving interposed entities, which act as agents or nominees. Agents and nominees do not possess dominion over income. They are obliged under property law to pass on income to third parties, namely their principals or mandators, whereas a conduit company has property rights over income by definition. That is, it possesses dominion over its income simply by virtue of being a corporation. It follows that, if dominion is used as a test for determining whether an interposed company is eligible for treaty benefits, it will always qualify regardless of whether it acts as a conduit.
 
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