ICC Comments on the Draft 2017 Update to the OECD Model Tax Convention
The OECD Model Tax Convention (MTC) operates as the basis for negotiation and interpretation of thousands of tax treaties from the various tax systems around the world, with the aim of diminishing tax barriers and ultimately increasing trade and investment.
The current update has not yet been approved by the Committee on Fiscal Affairs or by the OECD Council, however, significant parts of the 2016 update were previously approved as part of the Base Erosion and Profit Shifting (BEPS) package.
The draft will be submitted for the approval of the Committee on Fiscal Affairs and of the OECD Council later in 2017, and therefore does not necessarily reflect the final views of the OECD and its member countries.
Certain changes, including those made to Article 10 of the MTC as well as to the Commentary on Articles 4 and 5 of the MTC, had not previously been open to comments, until recently. In respect of this, the comments from ICC focus on the changes made to the Commentary on Article 5, ‘Concerning the Definition of Permanent Establishments’. These amendments concern the role of registration, for the purposes of value added tax or goods and services tax, on the application and interpretation of the definition of permanent establishments.