Arbitration of Tax Treaty Disputes: The OECD Proposal

Abstract

In February 2007, the Organization for Economic Co-operation and Development (OECD) published the Report adopted by its Committee on Fiscal Affairs (CFA) on 30 January 2007, Improving the Resolution of Tax Treaty Disputes .[1][1] The main feature of the OECD Report is to supplement the current dispute resolution mechanism – the mutual agreement procedure – by mandatory arbitration. The OECD Report calls for the insertion of a new paragraph 5 in Article 25 of the OECD Model Tax Convention, provides amendments to the Commentary to the Model Tax Convention and a draft of a Mutual Agreement on Arbitration to be entered into by the Contracting States to set out the specifics of the arbitration procedure. The authors, arbitration and tax practitioners, give an overview over the current dispute resolution mechanism in Article 25 of the OECD Model Tax Convention, summarize the proposed amendment of the Model Tax Convention together with the draft Mutual Agreement on Arbitration and set out the arbitration procedure proposed from a practical viewpoint. [1]: #fn-1