The OECD Model Convention on Taxation, a model for countries that enter into bilateral tax agreements, plays a crucial role in removing tax barriers to cross-border trade and investment. It forms the basis for the negotiation and implementation of bilateral tax treaties between countries, which aim to support businesses while helping to prevent tax evasion and evasion. The OECD model also provides a way to consistently address the most common problems with international double taxation. The OECD`s model convention on taxation was born. He was an interesting baby. The so-called London and Mexican models of the League of Nations are clearly in the family tree, but the direct parents were the senior tax officials of the European countries who launched in 1956 a joint project to develop uniform tax rules under the aegis of the OEEC. Like all parents, they didn`t know what their baby would be. 4. Find a way to speed up the contract update process based on the model. This approach to soft law requires adaptability and transparency. Changes to the model are always published in advance as drafts and Member States have time to discuss and decide whether further changes are needed or not. Ongoing dialogue with businesses and non-members is essential to defining adequate international tax rules and, over the years, the model has always drawn strength from the demands of tax authorities and the evolution of the economic experience. International double legal taxation – generally defined as the collection of comparable taxes in two (or more) states on the same purpose and for identical periods – has adverse effects on international trade in goods and services and on cross-border movements of capital, technology and people.
Recognizing the need to remove this obstacle to the development of economic relations between countries and the importance of clarifying and standardizing the tax situation of taxpayers operating in other countries, the OECD`s model tax treaty on income and capital provides a way to consistently resolve the most common problems with international double taxation. We have also clarified the delicate concept of the place of effective management, which is the Tiebreaker test for resolving cases where companies have dual tax residence, and we have provided an alternative provision that moves away from the site of the effective management test and refers the case to the mutual agreement procedure. In order to avoid double taxation, which has significant distorting effects on cross-border trade and investment, countries have developed a vast network of bilateral tax treaties. However, in the absence of internationally agreed standards and an easily accessible set of provisions, it would be extremely difficult to negotiate these bilateral agreements between countries and their application may give rise to divergent interpretations. This case study focuses on the coordination of internationally agreed standards for eliminating double taxation and preventing tax evasion. These standards are reflected in the network of more than 3,500 bilateral tax treaties, which are interpreted and applied on the basis of these standards, which must be constantly refined and adapted to new situations. A project on the transfer pricing aspects of corporate restructurings is now on the agenda www.oecd.org/ctp/tp/br. Please submit your comments by February 19, 2009.
Half a century ago, the budget committee of the European Organisation for Economic Cooperation (OEEC), which later became the OECD, published a first draft on what a model contract on international taxation could be. The global economy began to integrate more in the 1950s and the intention was to support businesses and governments by helping to avoid double taxation and prevent tax evasion.