Model Tax Convention Research Articles

A New Model Tax Convention for a World of Increasing Remote Work and Mobility of Individuals

Model Tax Conventions have been the subject of eternal and very heated discussions regarding corporate income taxation, particularly in the recent times as a result of the BEPS Project and its epilogue (the Pillars). However, very little attention has been paid to the challenges and risks posed to tax treaties by the generalization of remote work (a phenomenon that is on the rise, most notably after the 2020 pandemic) and the consequent increased opportunities for individuals to move across jurisdictions, temporarily or permanently relocate in new jurisdictions or even embark on a nomadic life. In the present paper, the author will attempt to provide an in-depth reflection on the impact that these phenomena may trigger in the application of tax treaties on the taxation of income of both individuals and linked entities. They will subsequently propose adjustments to the Model Tax Conventions such as reviewing the tie-breaker rules for resolving dual residency issues (article 4), reinterpreting or modifying the permanent establishment concept for the taxation of business profits (article 5), assessing the elimination of the independent personal services clause (article 14) and revising the rules on the taxation of employment income (article 15). In all cases, specific and near final proposals will be provided for the redrafting of the relevant articles.

О научной дискуссии в отношении понятия «международное двойное налогообложение»

In general the approach of the OECD model tax convention to the definition of international double taxation is widely accepted in the scientific and educational literature. At the same time it would be incorrect to say that there is, in principle, no scientific discussion regarding this concept. In the article the author brings to the reader's attention approaches to understanding international double taxation presented in German literature, including a proposal to adjustt traditional definition from OECD documents in connection with the introduction of the definition of the term “double taxation” in one of the European Union directives on taxation. The author offers a critical overview of the existing approaches, and also discusses the role of the concept of “international double taxation” in Russian tax law.

Article 2 of Double Taxation Agreements and the Fate of Digital Service Taxes

Article 2 of double taxation agreements (DTAs) is intended to ensure covered taxes under a DTA. Article 2 is significant since the legal protection provided by DTAs is limited only to the scope of DTAs. However, the wording of Article 2 may lead to confusion and uncertainty for taxpayers in terms of taxes within the scope of DTAs. In recent years, there has been a widespread trend of excluding digital service taxes (DSTs) from DTAs due to the lack of a global consensus on a common solution. This has refocused attention on Article 2. The fact that there is a scarcity of research on Article 2 raises concerns about what will happen if different types of taxes emerge over time. In this article, some important points and Türkiye’s approach related to Article 2 and Türkiye’s DST law which sometimes causes ambiguities and uncertainties for taxpayers were highlighted. This article also aimed to enhance a common understanding of the logic of the term "taxes covered." The research employed the descriptive research method, primarily utilizing the OECD Model Tax Convention (MTC) and its commentary, as well as prominent academic studies in the field and the Turkish DST law.

Characteristic of mutual Agreement procedure in case of the double taxation treaty between Azerbaijan and Ukraine

The article is dedicated to comparative and legal analysis of the provisions on mutual agreement procedure in Art. 25 of the Convention between the Government of Ukraine and the Government of Azerbaijan Republic on Avoidance of Double taxation and Prevention of Tax Evasion regarding Taxes on Income and Capital dated 30 July 1999 in the context of recommendations included in Art. 25 of the OECD Model Tax Convention. The latter one is widely recognized source of interpretation of norms of bilateral double taxation treaties in many countries including Ukraine. This analysis, on the one hand, is aimed at finding ways of improvement of normative basis of mutual agreement procedure taking into consideration the risk of high number of tax disputes (for example, the replacement of the term ‘person’ with the term ‘resident’ in the first sentence of Art. 25(1) of the abovementioned Convention creates the risk of ambiguity in the context of personal scope of mutual agreement procedure in case of non-compliance of contracting state with the duties on non-discrimination regime) and, on the other hand, is assisting in the determination of compliance of Art. 25 of the abovementioned Convention with other international commitments of both contracting states (e.g., both contracting states have accepted commitments to introduce three-year minimum term for initiation of mutual agreement procedure by taxpayers according to the framework of the global campaign on counteracting base erosion and profit shifting but Art. 25(1) of the mentioned Convention does not mention such limitation in contrast to the provisions of Art. 25(1) of the OECD Model Tax Convention). Moreover, the author also admits that Art. 25(2) of the bilateral Convention does not include reference to the duty on implementation of mutual agreements concluded between competent authorities under the mutual agreement procedure without the link to the domestic time limits that is also not in accordance of the multilateral commitments. On the basis of this analysis, the author determines the need of amendments of Art. 25(1) and Art. 25(2) of the mentioned Convention that could improve efficiency and effectiveness of mutual agreement procedure as a mechanism of dispute resolution.

Триангулярные (треугольные) ситуации в международном налогообложении и сложности их разрешения

The article describes the classical types of triangular cases in international taxation and outlines possible ways to eliminate multiple juridical taxation in each triangular case. The authors provide arguments in favour of the thesis that bilateral tax treaties do not effectively resolve double juridical taxation in triangular cases. The article presents relevant provisions of the OECD Model Tax Convention as amended in 2017, aimed at preventing the abuse of tax agreement benefits by a taxpayer in a triangular case.

Юридическое значение Комментариев к Модельной налоговой конвенции ОЭСР. Что изменилось?

The article analyzes the legal basis of the Commentaries on the Articles of the OECD Model Tax Convention in the interpretation of Russia’s tax treaties, taking into account changes in the interaction of states in the tax sphere. The author describes the conditions for using of the UN Commentaries.

Dual-residency of Companies and EU Law: Accessing Corporate Tax Directives’ Benefits After the 2017 OECD Model Tax Convention Changes in the Dual-residency Tie-breaker for Companies

Dual-residency of Companies and EU Law: Accessing Corporate Tax Directives’ Benefits After the 2017 OECD Model Tax Convention Changes in the Dual-residency Tie-breaker for Companies

<span>Unless the Vienna Convention Otherwise Requires: Notes on the Relationship between Article 3(2) of the OECD Model Tax Convention and Articles 31 and 32 of the Vienna Convention on the Law of Treaties</span><span></span>

<span>Unless the Vienna Convention Otherwise Requires: Notes on the Relationship between Article 3(2) of the OECD Model Tax Convention and Articles 31 and 32 of the Vienna Convention on the Law of Treaties</span><span></span>

DAC8 and Extraterritoriality: How to Enforce Compliance for non-EU Operators

Directive on Administrative Cooperation (DAC8) extends its scope to non-EU operators to improve the effectiveness of the exchange of information on crypto-asset transactions. Nonetheless, it is still for the Member States to determine the nature and size of the penalties for non-compliance and address their extraterritorial enforcement. Starting from this assumption, the present article aims to explore what penalties the Member States can adopt against non-compliant operators based in third countries. Furthermore, this study focuses on the multilateral, bilateral, and unilateral instruments for the extraterritorial enforcement of such penalties. To this scope, the author conducts doctrinal research followed by a conceptual analysis of the existing literature as well as interdisciplinary research focusing on the effectiveness of DAC8 for decentralized crypto-assets. The conclusions underline that the Member States should introduce a combined set of monetary and non-monetary penalties, including internet content blocking and a ban on cryptoasset transactions with blacklisted non-EU operators assisted by a sanctions program. Besides, to ensure their extraterritorial enforcement, Member States should adopt a broader definition of tax claim within the Convention on Mutual Administrative Assistance in Tax Matters (CMAAT) and the OECD Model Tax Convention as well as appropriate dissuasive measures against noncooperative jurisdictions in the area of recovery assistance. Administrative cooperation, Tax transparency, Exchange of information, DAC8, Crypto-assets, Monetary penalties, Nonmonetary penalties, Internet content blocking, Extraterritorial enforcement, Non-EU operators

Interpreting Tax Treaties: The Importance of Post-Treaty Commentary to the OECD Model Tax Convention for Achieving Uniformity and Ensuring the Success of the New International Tax Order

Interpreting Tax Treaties: The Importance of Post-Treaty Commentary to the OECD Model Tax Convention for Achieving Uniformity and Ensuring the Success of the New International Tax Order

The 2017 and 2021 UN Model Tax Convention Updates and Their Impact on the Countries’ Treaty Practice

This paper deals with the 2017 and 2021 UN Model updates and their possible impact on countries’ tax treaty policy and practice. The Author provides an overview of the most relevant changes to the text of the UN Models 2017 and 2021, and possible interactions between the two most important new UN Model’s provisions: Article 12A dealing with fees for technical services and Article 12B dealing with income from automated digital services and Pilar One and Pilar Two.

The 1963 OECD Model Tax Convention: Now and Then

This article reviews the importance of the 1963 Organization for Economic Co-operation and Development (OECD) Model Tax Convention in the development of the current international bilateral treaties network and compares its principles to those found in the US model tax convention. It then shows how the 1963 OECD model has laid the foundations for the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) agreed on by more than over 100 jurisdictions. US model, OECD model, MLI, tax treaties, international tax, tax history

UN MTC Article 14: The Mistaken Retention

The OECD deleted Article 14 from its Model Tax Convention (MTC) in 2000, however, the UN decided to retain it in 2009. The OECD has since been chastized for eliminating it and the UN eulogized for retaining it. This article, contrary to the prevailing perspective, supports the ‘delete decision’, though for reasons diametrically different from those on which Organization for Economic Cooperation and Development (OECD) based its decision in 2000. It berates the UN for the ‘retain decision’ by debunking the grounds thereof and by mounting new arguments. In fact, it turns the mainstream scholarships’ professed position upside down that Article 14s continued presence on UN MTC accrued developing countries substantial economic benefits and broadened their tax base. It is argued that the deletion of UN MTC Article 14(1)(c) in 1999 through an angularly established setup – the Focus Group – was dramatic, mysterious, and undefendable warranting fresh and deeper scrutiny. This article postulates that without a robust built-in anti-base erosion principle, which was deleted in 1999, Article 14s presence in the UN MTC is counterproductive, base eroding, and inimical to fiscal interests of developing countries. Therefore, it strongly proposes to either restore the deleted Subparagraph 1(c) or also delete the retained rump Article 14 itself – sooner than later. UN MTC article 14, independent personal services, OECD MTC article 14, professional services, dependent personal services

The real estate clause in the OECD model tax convention and its reception into Polish law

This article deals with the issue of the real estate clause and its reception to Polish law as a real estate company. The research was conducted on the grounds of Corporate Income Tax Act and Personal Income Tax Act. The article verifies the hypothesis the concept of the real estate clause included in the OECD Model Tax Convention constitutes a mechanism enabling the countries of the location of the real estate to participate in the benefits arising in connection with the transaction of disposal of shares in a given company in exchange for granting legal protection of such transaction. The research method used in this study was a critical analysis, including a linguistic analysis of the provisions of tax acts and international agreements to which the Republic of Poland is a party. In addition, the research methods used in this article are the analysis of views of doctrine and jurisprudence of administrative courts and tax authorities.

A New Scenario in International Tax Law: Two Proposals to Rethink the OECD Model in Response to the Generalization of Distance Work by Employees

This article analyses the necessity to adapt the OECD Model Tax Convention (OECD Model) for remote work. It argues that a legally binding agreement must be reached on two fundamental aspects: tax liability criteria for remote workers’ earnings and conditions determining when an employee’s remote work creates a permanent establishment (PE) for the employer. The article investigates the current regulation of these issues in the OECD Model, identifies problem areas and proposes reforms. In particular, it suggests a reformulation of tax liability determination for income from remote-working employment based on a reconsideration of the “source state” concept. Additionally, the article proposes creating an ad hoc decision tree to provide a clear and efficient method for verifying the potential existence of a PE due to an employee’s remote work.

Justice, Third-Party Funding, and Tax Treaty Arbitration

Resolving tax treaty disputes and improving dispute resolution mechanisms for tax treaty disputes have been important topics for international tax for decades, but it has not been an easy journey for the international tax community including policymakers, international bodies, and academics to come up with a clear solution. Similar to other global policies that require a multilateralagreement, a multilateral approach to a global tax policy cannot be easy as relations among the states with different backgrounds need to be coordinated and it involves critical issues relevant to national interests such as tax sovereignty, revenue, conflicts with domestic laws, and financial resources. That being said, the current global approach to resolve unsuccessful Mutual Agreement Procedure (“MAP”) cases of a tax treaty seems fairly straightforward under both the Organization for Economic Co-operation and Development and the United Nations’ Model Tax Conventions as both simply suggest arbitration to step in to render a final decision for the unsuccessful MAP cases. However, due to the factors mentioned earlier, the vast majority of the bilateral tax treaties do notcontain the arbitration clause, and it seems quite clear that an approach needs to be made from both within and outside the boundaries of international tax, tackling sub-issue by sub-issue, in order to improve dispute resolution mechanism for tax treaty disputes. This Article aims to highlight the importance of having the arbitration clause in a tax treaty, and focusing on the financial aspects of tax treaty arbitration, examines whether third-party funding (“TPF”), which has become more mainstream in traditional international arbitration proceedings, could be utilized in tax treaty arbitration to remove certain financial barriers as in other traditional arbitration proceedings by analyzing (i) any legal barriers, (ii) benefits from a justice perspective, and (iii) investment merit from a funder perspective. For the analysis, the Article specifically discusses (a) the current issues and the status quo of the MAP and tax treaty arbitration, (b) how TPF has been utilized in international arbitration and helping parties without orinsufficient financial resources, (c) differences and similarities between tax treaty arbitration and other types of international arbitration i.e., international commercial arbitration, investor-state arbitration, and state-state arbitration, and (d) TPF from both the taxpayer claimant and the funder perspective.

An Overview of the UN Model Tax Convention and Electronic Commerce

The development of Information and Communications Technology (ICT) on the field of international trade and commerce resulted into the development of online market or internet commerce (cyber market where vendors and buyers meet to trade); this later came to be known as Electronic Commerce (herein after E-Commerce). E- Commerce, being a new form of commerce World Wide, as against traditional commerce system, brought legal and administrative challenges to the traditional taxation system World Wide. This paperwork examined how the existing taxation principles can regulate e-commerce in line with United Nations Model Tax Convention (herein after the UN Model Tax Convention) and other international taxation guidelines adopted by Organization for Economic Co-operation and Development (herein after OECD) and World Trade Organization (herein after WTO) without compromising the on motion internet commerce and technological development on trade and commerce sector. Lastly proposed modifications of existing rules on imposition of taxation on conventional commerce to regulate e-commerce

Disaggregation of Financial Instruments in International Tax Law

Disaggregation is the technique of decomposing a facts pattern into components and their separate legal subsumption. As a pre-step to prepare a legal case, it is an all too practical problem and therefore seems to be rather neglected in the high art of jurisprudence. This contrasts with the great importance of the substance over form doctrine in legal practice, being a universal and timeless issue in all fields of law dealing with economic subjects and in all jurisdictions. At the example of financial instruments as the ‘burning lens’ of tax law and the OECD Model Tax Convention (OECDMTC) as the ‘tax system for tax systems’, this article contributes a discussion base for a methodologically supported concept to disaggregation. Inspired by U.S. federal tax policy, finance theory and International Financial Reporting Standards (IFRS), the author takes the liberty of a progressive and unconventional approach. Its centrepiece is an iterative process of identifying, decomposing, and eliminating economic risk types utilizing findings from portfolio theory and option pricing. Disaggregation, bifurcation, fragmentation, unbundling, disassembly, decomposition, OECD Model Tax Convention, financial instrument, substance over form, look-through.

Tax Treaty Dispute Resolution Procedures

The subject of the work is a comparative analysis of the OECD approach and the EU approach to the resolution of international tax disputes. The research is conducted on the basis of the provisions of the OECD Model Tax Convention, the OECD Multilateral Tax Convention, the EU Arbitration Convention and the EU Directive. The purpose of the work is to find the most effective mechanism for resolving international tax disputes in terms of ensuring the protection of taxpayers' rights in the dispute resolution procedure. The methodological basis of the work was made up of general scientific (analysis, classification, synthesis, deduction, induction, analogy), private scientific (system method) and special legal (formal legal and comparative legal) methods of scientific research. The scientific novelty of the work suggests the proposal and justification as a way to increase the effectiveness of the resolution of international tax disputes, the use of mediation in a mutually agreeable procedure with the provision of the taxpayer with the possibility of direct participation in the dispute resolution procedure. Based on the results of the study, the author came to the following conclusions. The practice of applying the mutual agreement procedure and arbitration shows that this dispute resolution mechanism has a number of significant drawbacks. In order to improve the efficiency of dispute resolution, the OECD and the EU are striving to develop mandatory arbitration and do not consider non-binding mechanisms, since they do not guarantee an agreement on the dispute. However, mandatory arbitration cannot be considered a universal instrument, since States see it as a threat to sovereignty. The experience of States that actively use mediation to resolve domestic tax disputes shows that mediation can also become an effective mechanism for resolving disputes at the international level, since it allows the parties to consider various aspects of the dispute from different sides. According to the author's position, the shortcomings of mediation outlined in the doctrine can be mitigated by granting the affected taxpayer the right to participate directly in mediation, presenting his position on the case.

Article: Some EU and Tax Treaty Law Considerations on the Draft EU Directive on Global Minimum Taxation for Multinationals in the Union

In this article the author examines whether the draft EU Directive on Global Minimum Taxation for Multinationals complies with primary Union and whether the GloBE Model rules comply with the commitments undertaken by jurisdictions under their bilateral tax treaties that follow the OECD Model. Suggestions are also made on how the prevention and resolution of disputes under the Globe Model rules can be improved. Global Minimum Taxation for Multinationals, GloBE Model Rules, draft EU Directive on Global Minimum Taxation for Multinationals, Compliance with primary Union law, Compliance with the OECD Model Tax Convention, Dispute Prevention and Resolution.