Question

What is meant by the term treaty shopping? Research tax treaties on the Internet and tell us about one that you find!

Answer 1

Treaty shopping:

Where a national or resident of third country seeks to obtain the benefit of a double tax agreement between two other countries by interposing a company or other entity in one or other of them.

One of the Tax treaties that found by me:

AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF COSTA RICA FOR THE EXCHANGE OF INFORMATION RELATING TO TAXES.

1. This Agreement shall apply to the following taxes imposed by the Parties:

           (a) in the case of the United States, all federal taxes

          (b) in the case of Costa Rica, taxes of every kind and description collected by the Ministry of Finance.

2. This Agreement shall also apply to any identical or substantially similar taxes that are imposed after the date of signature of this Agreement in addition to or in place of the existing taxes. The competent authorities of the Parties shall notify each other of any significant changes that have been made in their taxation laws or other laws that relate to the application of this Agreement.

3. The competent authority of the requested Party shall provide information upon request by the competent authority of the applicant Party for the purposes referred to in Article 1 (Object and Scope of this Agreement). Such information shall be exchanged without regard to whether the requested Party needs such information for its own tax purposes or whether the conduct being investigated would constitute a crime under the laws of the requested Party if such conduct occurred in the requested Party.

4. If the information in the possession of the competent authority of the requested Party is not sufficient to enable it to comply with the request for information, the requested Party shall use all relevant information gathering measures to provide the applicant Party with the information requested, notwithstanding that the requested Party may not need such information for its own tax purposes. Privileges under the laws and practices of the applicant Party shall not apply in the execution of a request by the requested Party and the resolution of such matters shall be solely the responsibility of the applicant Party.

5. If specifically requested by the competent authority of the applicant Party, the competent authority of the requested Party shall provide information under this Article, to the extent allowable under its domestic laws, in the form of depositions of witnesses and authenticated copies of original records.