The UTPR is Flawed: A Response to Prof. Picciotto

October 2022
Region: Americas

Squire Patton Boggs’ Jeff Vanderwolk’s letter to the editor appears in this issue of Tax Notes International.

Sol Picciotto’s letter on tax treaties and the UTPR (now known as the undertaxed profits rule)1 suggests that article 9 of tax treaties somehow supports the idea that a contracting state has an unrestricted right to tax a resident company under the UTPR, in respect of profits earned by an affiliated company resident in the other contracting state from business having no connection to the first contracting state or its resident taxpayer. Article 9, however, relates only to situations in which affiliates resident in the two contracting states have had dealings with each other.

*This article was first published in Tax Notes International on October 17, 2022.