Article 27 - Limitation of Benefits

Principal purposes test denies treaty benefits when obtaining the benefit was a principal purpose of the arrangement.

The treaty's original Limitation of Benefits denied relief where obtaining treaty relief was a main purpose of persons creating or assigning income, with competent authorities allowed to consider factors like income nature, transaction circumstances, parties' intentions, and identity and control of legal or beneficial owners. That provision has been replaced by the MLI's Principal Purposes Test, which denies benefits when it is reasonable to conclude that securing the benefit was one of the principal purposes of the arrangement or transaction, unless granting the benefit aligns with the object and purpose of the relevant treaty provision.