IMF/OECD/UN/WBG – The Platform for Collaboration on Tax. The Taxation of Offshore Indirect Transfers – A Toolkit. The tax treatment of ‘offshore indirect transfers’ (OITs) – in essence, the sale of an entity owning an asset located in one country by a resident of another – has emerged as a significant issue in many developing countries. It has been identified in IMF technical assistance work and scoping by the OECD but was not covered by the G20 – OECD project on Base Erosion and Profit Shifting (BEPS). In relation to the extractive industries, OITs are also the subject of work at the UN. The country in which the underlying asset is located may wish to tax gains realized on such transfers – as is currently the case for direct transfers of immovable assets. Some countries may wish to apply this treatment to a wider class of assets, to include more those generating location specific rents – returns that exceed the minimum required by investors and which are not available in other jurisdictions. This might include, for instance, telecom licenses and other rights issued by government. The report also recognizes, however, that gains on OITs may be attributable in part to value added by the owners and managers of such assets, and that some countries may choose not to tax gains on OITs. The provisions of both the OECD and the UN Model treaties suggest wide acceptance that capital gains taxation of OITs of “immovable” assets can be imposed by the location country. It remains the case, however, that the relevant model Article 13(4) is found only in around 35 percent of all Double Tax Treaties (DTTs) and is less likely to be found when one party is a low-income resource – rich country. The MLI has increased the number of tax treaties that include Article 13(4) of the OECD MTC. This impact is expected to increase as new parties sign the MLI and amend their covered tax treaties to include the new language of Article 13(4). Regardless of what any treaty provides, however, such a taxing right cannot be supported without appropriate definition in domestic law of the assets intended to be taxed and without a domestic law basis to assert that taxing right. There is a need for a more uniform approach to the taxation of OITs by those countries that choose to tax them. Countries’ unilateral responses have differed widely, in terms of both which assets are covered and the legal approach taken. Greater coherence could enhance tax certainty. The report outlines two main approaches to the taxation of OITs by the country in which the underlying asset is located – provisions for which require careful drafting. It identifies the two main approaches for so doing and provides, for both, sample simplif ied legislative language for domestic law in the location country. One of these methods (‘Model 1’) treats an OIT as a deemed disposal of the underlying asset. The other (‘Model 2’) treats the transfer as being made by the actual seller, offshore, but sources the gain on that transfer within the location country and so enables that country to tax it. The report expresses no general preference between the two models: the appropriate choice will depend on countries’ circumstances and preferences.