Limitation of Benefits restricts treaty benefits to qualified persons and genuine active business to prevent treaty abuse.

Limitation of Benefits restricts treaty benefits to qualified persons-such as individuals, government entities, listed companies, agreed non profits, specified pension or investment vehicles, or entities majority owned by qualified beneficiaries-and provides an active conduct of business exception for income connected to substantive business activities. Failing those tests, competent authorities may grant benefits upon satisfaction that obtaining treaty advantages was not a principal purpose, and the MLI supplies ownership, connected person and recognised exchange definitions plus a Principal Purposes Test to deny benefits where treaty advantage was a main purpose.

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