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OECD Updates Model Tax Treaty

by Ulrika Lomas, Tax-News.com, Brussels

12 September 2005

The OECD last week published a new, updated version of its Model Tax Convention, used by both OECD and other countries as a basis for the negotiation, application and interpretation of bilateral tax treaties, of which there are now more than 2,500 in force around the world.

The OECD Model is periodically updated to take account of new developments and to reflect the experience gained by countries in the application of tax conventions. The 2005 edition incorporates the latest changes to the Model which were approved by the OECD Council on 15 July 2005 (these changes were released in draft form for comments on 15 March 2004).

The changes result from work done by the Committee on Fiscal Affairs on a number of issues, in particular:

  • the tax treatment of activities related to international shipping and air transport;
  • cross-border income tax issues arising from employee stock-option plans;
  • tax issues arising from cross-border pensions;
  • the issue of multiple permanent establishments;
  • the revision of Article 26 and its Commentary concerning the exchange of information; and
  • various technical issues related to the interpretation of tax conventions.

The new edition also includes changes made by a number of OECD and non-OECD countries to their observations, reservations or positions on the OECD Model Tax Convention. In addition, Serbia and Montenegro’s positions on the Model Tax Convention have been added to the Convention.

The 2005 Update will be supplied automatically to subscribers of eMTC, a new electronic edition of the convention complete with histories, commentaries and background reports. It is also available as a new paperback (condensed) edition. Both eMTC and the condensed edition (costing 53 euros) are available via OECD Publishing sales offices and agents or via the OECD online bookshop. The loose-leaf edition will soon be updated to incorporate the latest changes.

The OECD is at www.oecd.org.

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