Dr. Brian Keegan:

We have already teased out situations in which companies are engaged in cross-border transactions. This kind of situation might arise if, for example, a company has a number of operations, one of which may be in a very low-tax jurisdiction, perhaps a jurisdiction known as a tax haven, where a particular double taxation treaty stipulates that there is no withholding tax on royalties going to that particular territory. This will result effectively in a form of double non-taxation in that income is taxed neither in the paying company nor in the receiving company. It is these kinds of situations, to take a very straightforward example, that give rise to concerns.