BEPS Hybrid Entities Proposal: A slippery slope, especially for developing countries

Article 1(2) has been proposed in the final report on G20/OECD's Base Erosion and Profit Shifting (BEPS) Action 2. Two principle purposes of the BEPS project can be identified: First, to combat against aggressive tax planning which results in less than single taxation, and secondly, to allocate taxing rights to the state in which the economic activity gives rise to income. This article demonstrates that Article 1(2) tends to enable diametrically opposite results.