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OECD Reviews Treaty Guidance On International Transport

by Ulrika Lomas, Tax-News.com, Brussels

22 November 2013


The Organization for Economic Cooperation and Development's (OECD) Committee on Fiscal Affairs has launched a public consultation on changes to the OECD Model Tax Convention – used as a benchmark for double tax treaty negotiations globally – to tackle issues surrounding the taxation of ships and aircraft in international traffic.

In the OECD Model Tax Convention, Article 8 deals with profits from the operation of ships and aircraft in international traffic and boats engaged in inland waterways transport; paragraph 3 of Article 15 deals with the taxation of employees who work on such ships, aircraft and boats, and also defines the term "international traffic."

An OECD working party has considered adapting the OECD Model Convention to reflect the current treaty practices of the majority of OECD and non-OECD countries concerning Article 8, and also to reevaluate the appropriateness of the model convention's current definition of "international traffic," as well as provisions governing the tax treatment of employees onboard ships and aircraft. In the main, the proposals primarily concern international shipping and airlines as well as their employees.

The OECD anticipates that the proposals put forward in this discussion draft will not be included in the 2014 Update to the Model Tax Convention. Therefore a lengthy consultation period, until January 15, 2014, has been allowed for feedback from interested parties.

TAGS: tax | marine | interest | employees | corporation tax | individual income tax | Tax

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