1. Introduction

Most contemporary tax treaties stipulate that for applicability of the concessional source state withholding tax rate stipulated in the articles dealing with dividends (Art. 10 in majority of tax treaties), interest (Art. 11) and royalties and fees for technical/ included services (Art. 12), the recipient must be the ‘beneficial owner’ of the income.

In a case where Company S in Country S pays dividends to Company R in Country R but the beneficial owner of that income (Company B) is tax resident of Country B, would it be possible to apply the concessional withholding tax rate stipulated in paragraph 2 of Art. 10 (Dividends) of the tax treaty between Countries S and B?

2. Author’s view and rationale