This consultation document includes a number of specific questions related to concerns, identified in comments received on previous discussion drafts related to the BEPS Action 6 Report, as to how the new provisions included in the BEPS Action 6 Report could affect the treaty entitlement of non-CIV funds as well as to possible ways of addressing these concerns that were suggested in these comments or subsequently.

The OECD points out that paragraph 14 of the Action 6 report states: ‘… there is a need to continue to examine issues related to the treaty entitlement of non-CIV funds to ensure that the new treaty provisions that are being considered adequately address the treaty entitlement of non-CIV funds.

‘The continued examination of these issues would also address two general concerns that governments have about granting treaty benefits with respect to non-CIV funds: that non-CIV funds may be used to provide treaty benefits to investors that are not themselves entitled to treaty benefits and that investors may defer recognition of income on which treaty benefits have been granted.’

The OECD sets out a number of proposals and concerns in the consultation document. These include:

• the proposal that treaty benefits be granted to regulated and/or widely-held non-CIV funds;
• the requirement for non-CIV funds to be set up as transparent entities; whether to include a  derivative benefit rule applicable to certain non-CIV funds; the identification of the investors in a non-CIV fund; 
• how to record the ownership of interests in non-CIV funds; thee new derivative benefits provision of the US model; 
• whether a ‘substantial connection’ approach should be adopted and, if so, how;  the option of a ‘Global Streamed Fund’ regime; and
• concerns with respect to conduit arrangements and the ‘special tax regimes’ proposal.

Stakeholders are invited to respond to the specific questions and may also offer additional suggestions. Since a number of questions are likely to be relevant only for commentators who supported specific approaches, it is expected that most commentators will only address some of the questions.

Responses should be sent by 22 April 2016 by email to [email protected]

The consultation document on tax treaty entitlement of non-Collective Investment Vehicle (CIV) funds is here