Friday, 18 May 2018

UN Model Convention 2017 introduces anti-abuse rules, new FTS article; Incorporates BEPS language

United Nation releases 2017 update of the Model Double Taxation Convention between Developed and Developing Countries;  The UN Model Convention introduces new article 12A on 'fees for technical services' (the article which is absent in OECD's convention); The 2017 update also incorporates some of the language of the BEPS project; The  2017 UN Model Convention  introduces a new general anti-abuse rule in article 29(9); A note released by the UN Committee states that "[the new rule] together with the specific anti-abuse rules included in tax treaties, is intended to prevent transactions and arrangements from being granted treaty benefits in circumstances where granting such benefits would be contrary to the object and purpose of the Model Convention";  Article 4 is modified to include a new tie-breaker rule for determining the treaty residence of dual-resident persons other than individuals and  Article 5 is modified to prevent the avoidance of permanent establishment status; The 2017 Model was released during the 16th session of The Committee of Experts on International Cooperation in Tax Matters of United Nations held this week at New York 

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