Dangers Of Tax Planning. Principal Purpose Test

Описание: In this video, I explain how recent changes in law make international tax planning more difficult.

The Economic Organization for Cooperation and Development (OECD) has significant influence over the international tax system. They’ve convinced almost 100 countries to sign on to a tax treaty called the Multilateral Instrument (MLI).

A core component of the MLI is the Principal Purpose Test (PPT). In short, the PPT states that if one of the principal purposes of an arrangement or transaction is obtaining a tax benefit, then the tax benefit can be denied.

Take note, the PPT does not state that a tax benefit is the principal purpose. Rather, the rule applies if a tax benefit is simply one of many principle purposes.

The broad nature of the MLI and PPT pose significant challenges to international tax planning. Unfortunately, many advisors are not explaining the full implications to the MLI and PPT to clients.


Jimmy Sexton, LL.M. is the Founder & CEO of Esquire Group. He founded Esquire Group with the objective of helping and inspiring wealthy families, investors, entrepreneurs, and high-level executives obtain and gain control over and protect their wealth, via strategic wealth planning. Jimmy started his career in 2003 and continues to service an elite group of clients. In 2005 he extended services to include tax preparation, which has evolved into Esquire Group’s exclusive Concierge Tax Service. This service is offered to a limited number of clients.

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