Article 84 - General Anti-abuse Rule

For the purposes of applying the provisions of Article 41 of the Law, a transaction or arrangement may include any agreement, part of arrangement, action, understanding, promise, undertaking, event, scheme, transaction or series of transactions notwithstanding their legal enforceability, the identity of the contracting parties and the date in which the transaction or arrangement come into effect if a result referred in Paragraph B of Article 41 of the Law concern a Fiscal Year.

Determining whether the income from a transaction, arrangement, series of arrangements, or any part thereof, is for a genuine commercial purpose or a non-financial purpose that reflects economic reality within the context of Clause 1 of Paragraph B of Article 41 of the Law requires all of the following:

1. A determination of a legitimate goal aimed to be achieved by a Constituent Entity through the transaction, arrangement, or series of arrangements (if any).

2. An evaluation of whether the transaction, arrangement, or series of arrangements, or each part thereof are justified considering the legitimate goal of the Constituent Entity (if any), other than obtaining a Tax Advantage that defeats the purpose or objective of the Law.

In applying Paragraph B of this Article, the Bureau shall consider all the following:

1. The purpose and business justification for a given transaction, arrangement or series of arrangements as provided by the relevant Constituent Entity.

2. The circumstances that led to the decision to conduct the transaction, arrangement, or series of arrangements.

3. The manner in which the transaction, arrangement, or series of arrangements was structured and carried out.

4. Whether any artificiality or contrivance is evident in relation to that transaction, arrangement, or series of arrangements.

5. Whether there is a divergence between the form and substance of the transaction, arrangement, or series of arrangements.

6. The result achieved by the scheme compared to the result under alternative scenarios that would allow parties to achieve a legitimate business goal.

For the purposes of Paragraph B of this Article, all of the following criteria may be considered by the Bureau to suggest that a transaction, arrangement, or series of arrangements does not reflect economic reality:

1. The legal characterisation of the individual steps within an arrangement is inconsistent with the legal substance of the arrangement as a whole.

2. The transaction, arrangement, or series of arrangements is carried out in a manner not ordinarily adopted in a reasonable business conduct.

3. The transaction, arrangement, or series of arrangements includes elements that have the effect of offsetting or cancelling each other.

4. The transactions concluded are circular in nature.

5. The transaction, arrangement, or series of arrangements results in a significant tax benefit that is not reflected in the economic effect of the transaction, the business risks undertaken by the Constituent Entity, or its cash flows.

For the purposes of Clause 2 of Paragraph B of Article 41 of the Law, all of the following shall be considered:

1. A transaction, arrangement, or series of arrangements may be considered as having the primary purpose of obtaining a Tax Advantage that defeats the purpose or objective of the Law if it would not be reasonable for the entity to execute it in such a form in the absence of the option to achieve such a Tax Advantage.

2. The Tax Advantage resulting from the transaction, arrangement, or series of arrangements may be considered as defeating the purpose or objective of the Law, if granting the Tax Advantage is inconsistent with the aim of the provisions based on which the Tax Advantage is granted or if the arrangements are intended to exploit any gaps in the provisions of the Law or these Regulations.

3. A Tax Advantage may take any of the following forms:

   1. Decreasing Constituent Entity Income.

   2. Increasing Constituent Entity Covered Taxes or Adjusted Covered Taxes.

   3. Increasing the Substance-based Income Exclusion of a Constituent Entity.

   4. Creating or increasing a Constituent Entity Loss.

   5. Any other form provided that it has an impact on the Tax Due.

Where the Bureau determines Tax liabilities in application of Article 41 of the Law, all of the following shall be considered:

1. The adjustments applied shall be aimed at eliminating the Tax Advantage to the extent it defeats the purpose or objective of the Law.

2. The adjustments shall be aimed at establishing Tax at a level that would have been due if the relevant Entities had pursued their goals, other than those relating to obtaining a Tax Advantage that defeats the purpose or objective of the Law.

3. The adjustments may be applied on any Constituent Entity participating in the transaction, arrangement, or series of arrangements, irrespective of whether the Tax Advantage arises on its end.

4. The relevant Constituent Entities may identify the method which will serve as the basis for the Bureau's adjustments if there are multiple ways in which entities could achieve their legitimate goal in the transaction, arrangement, or series of arrangements.

5. The Bureau may indicate necessary adjustments to be made in subsequent years where a Tax Advantage is expected to arise in future Fiscal Years.