Australian Tax Treaties
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) has modified the application of this tax treaty. A synthesised text of the MLI and this tax treaty is available to facilitate the understanding of how the MLI modifies this tax treaty.
Where a person subject to the taxing jurisdiction of a Contracting State and any other person are related and where conditions are operative between such related persons in their commercial or financial relations which are different from those which might be expected to operate if such persons were unrelated persons dealing wholly independently with one another, then any profits which, but for those conditions, might have been expected to accrue to one of those persons, but by reason of those conditions, have not so accrued, may be included in the profits of that person and taxed accordingly.
(2)
A person is related to another person for purposes of this Convention if either person participates directly or indirectly in the management, control, or capital of the other, or if any third person or persons participates or participate directly or indirectly in the management, control, or capital of both.
(3)
This Article shall apply only where both Contracting States have a tax interest.
(4)
Notwithstanding the provisions of this Article, an enterprise of a Contracting State may be taxed by that State as if this Article had not come into effect but, so far as it is practicable to do so, in accordance with the principles of this Article.
(5)
Where profits on which an enterprise of a Contracting State has been charged to tax in that State are also included, by virtue of paragraph (1) or (4), in the profits of an enterprise of the other Contracting State and taxed accordingly, and the profits so included are profits which might have been expected to have accrued to that enterprise of the other State if the conditions operative between the enterprises had been those which might have been expected to have operated between independent enterprises dealing wholly independently with one another, then the first-mentioned State shall make an appropriate adjustment to the amount of tax charged on those profits in the first-mentioned State. In determining such an adjustment, due regard shall be had to the other provisions of this Convention in relation to the nature of the income, and for this purpose the competent authorities of the Contracting States shall if necessary consult each other.
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