Why is the lower tax treaty rate not automatically applied?

In practice, applying the lower tax treaty rate to your foreign income at the source is usually not possible. This is due to the fact that, for the withholding agent, it is not clear who the ultimate beneficiary of the income is. This is caused by the fact that there can be many parties interposed between the beneficial owner and withholding agent, such as (several) foreign and domestic parties in the custody chain (custodians). The withholding agent then withholds the statutory tax rate and not the lower tax treaty rate.