International Tax Implications of the Organisation for Economic Co-operation and Development Proposal to Neutralize Hybrid Mismatch Arrangements

The Organisation for Economic Co-operation and Development (OECD) has developed a sixteen part plan titled Base Erosion and Profit Shifting (BEPS). This comment focuses on the second part of that plan; Neutralizing Hybrid Mismatch Arrangements. Mismatches have become a useful tool for corporations to achieve double non-taxation in various jurisdictions. The comment begins by laying the groundwork of what a hybrid mismatch arrangement is and the current problems and complications with them in international tax.

Next, this comment addresses various jurisdictional approaches to mismatches, including: Ireland, The United Kingdom, The United States, and Denmark. The paper moves forward onto a discussion of OECD legislation and how large corporations, most famously Apple have leveraged various jurisdictions laws to their advantage. Finally, this comment proposes that instead of the OECD proposal, jurisdictions should use a bi-lateral treaty approach to implement change to their domestic laws.