Towards a New Non-discrimination Obligation—Policy Considerations

Abstract

This chapter attempts to build a bridge between the non-discrimination obligations in trade law agreements and tax treaties that impact non-resident service provider. Underlying the discussion are two broad questions. Should non-residents be ‘fair game’ (‘Fair game’ is used in this context to refer to a person that is considered a reasonable target for any type of treatment, including discriminatory treatment) for source state tax authorities? If not, what non-discrimination principle, obligation or standard should apply? The proposed non-discrimination obligation proposed is at best an uneasy compromise that engages the non-discrimination obligation in Article 24(1) of the OECD and UN Model Tax Treaties in a manner that was not anticipated by its drafters. Nonetheless, it attempts to safeguard the obligations assumed under trade agreements by introducing a minimum non-discrimination obligation to tax treaties while respecting tax sovereignty. The addition of such a non-discrimination obligation to a tax treaty challenges the current notion that a source State owes non-residents no such obligation. It also aligns with international trade law objectives.