Page 42 - UUBO Deal Academy 2020 - Materials

Concerns for PE Funds:

Action 6 – Treaty Shopping

▪ DTAs play an important role in PE fund structures as they preserve tax

neutrality for investors who are typically entitled to treaty benefits

▪ Action 6 introduces anti treaty abuse rules to prevent treaty shopping. The two

primary rules which apply more to CIVs are:

• LOB (limitation of benefits)

• PPT (principal purpose test)

▪ OECD members including the IF have adopted the recommendations in Action

6 through the MLI

▪ Treaty benefit rules for non CIVs which include PE Funds is W-I-P

▪ Substance and Transparency are the major considerations for the OECD in

developing anti treaty abuse rules for non CIVs

▪ In Dec. 2019 the FIRS issued an information circular on the claim of tax treaty

benefits in Nigeria
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