UK and International Tax news

OECD Releases Update To Model Tax Convention

Friday 22nd December 2017

The OECD has recently released the latest edition of the OECD Model Tax Convention incorporating significant changes developed under the OECD/G20 BEPS project.

The OECD MTC is a model for countries concluding bilateral tax conventions, and plays a crucial role in removing tax related barriers to cross border trade and investment. It is the basis for negotiation and application of bilateral tax treaties between countries, designed to assist business while helping to prevent tax evasion and avoidance. The OECD MTC also provides a means for settling on a uniform basis the most common problems that arise in the field of international double taxation.

The 2017 edition of the MTC mainly reflects a consolidation of the treaty-related measures resulting from the BEPS work under:

  • Action 2 (Neutralising the Effects of Hybrid Mismatch Arrangements),
  • Action 6 (Preventing the Granting of Treaty Benefits in Inappropriate Circumstances),
  • Action 7 (Preventing the Artificial Avoidance of Permanent Establishment Status), and
  • Action 14 (Making Dispute Resolution More Effective).

The OECD first published its Draft Model Tax Convention in 1963 when only a few dozen tax agreements were in force. Since that time, the OECD MTC has facilitated bilateral negotiations between countries and made possible a desirable harmonisation between bilateral conventions for the benefit of both taxpayers and national administrations.  More than 3000 tax treaties in force around the world are based on the OECD Model, which is regularly updated.

The full version of the MTC including the Articles, Commentaries, non-member economies’ positions, and historical notes, will be published in the coming year.

If you would like further information on the MTC, please contact Keith Rushen on 0207 486 2378.

 

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