By Julie Martin, MNE Tax
The UN Committee of Experts on International Cooperation in Tax Matters has released documents that reveal that significant changes are proposed for the United Nations Model Double Taxation Convention between Developed and Developing Countries and UN guidance addressing tax and transfer pricing issues associated with the extractives industries.
The documents will be considered for approval at the Committee of Expert’s 22nd session, the final session of the current 25-member committee, which began on Monday. The virtual meetings will run from April 19–23 and April 26–28. They will be followed by an April 29 ECOSOC Special Meeting on International Cooperation in Tax Matters.
The UN tax committee already approved the text of a controversial new Article 12B and Commentary for the UN model tax treaty on Tuesday. The new article would grant additional taxing rights to countries where an automated digital services provider’s customers are located. It is viewed as an alternative to the OECD-led Pillar One proposal for reforming the international tax system.
On Thursday, the committee will consider another important but disputed proposal, namely whether to add computer software payments to the model treaty’s definition of royalty payments. The changes would make it clear that source jurisdictions can levy a withholding tax on software payments. A subcommittee working on this issue has provided the full committee with a revised version of its proposal but notes that a majority of the subcommittee did not approve the proposal and Commentary in its current form. The note explains why the subcommittee reached this conclusion to help the full committee find a way forward.
Updated and new chapters for the UN Handbook on Selected Issues for Taxation of the Extractive Industries by Developing Countries will also be considered at this meeting, including a chapter that discusses common transfer pricing issues arising in the extractive industries. In relation to that proposal, the subcommittee working on those issues has released the following five papers:
- (E/C.18/2021/CRP10) Update of the Handbook on Selected Issues for Taxation of the Extractive Industries by Developing Countries (Chapter 1)
- (E/C.18/2021/CRP11) Chapter XX: The tax treatment of decommissioning (update)
- (E/C.18/2021/CRP12) Chapter XX: Issues and Best Practices in Auditing Oil, Gas and Mining Activities (new)
- (E/C.18/2021/CRP13) Chapter 5: Transfer Pricing Issues in Extractives (update)
- (E/C.18/2021/CRP.14) Update of the Handbook on Selected Issues for Taxation of the Extractive Industries by Developing Countries
Environmental taxes will be addressed on Friday and on Monday, April 23. Proposed chapters for the Handbook on Carbon Taxation for Developing Countries will be discussed at these meetings. In relation to that discussion, the following papers were released:
- (E/C.18/2021/CRP3) Coordinator’s report (with the complete, unedited version of the Handbook) – for INFORMATION
- (E/C.18/2021/CRP4) Chapter 1: Introduction – for DISCUSSION and APPROVAL
- (E/C.18/2021/CRP5) Chapter 3 [Former Chapter XX]: How to generate public acceptability for carbon taxes – for DISCUSSION and APPROVAL
- (E/C.18/2021/CRP6) Chapter 4A [Former Chapter 3A], Section 5.5.2: International maritime transport – for DISCUSSION and APPROVAL
- (E/C.18/2021/CRP7) Chapter 6 [Former Chapter 5]: Revenue use – for DISCUSSION and APPROVAL
- (E/C.18/2021/CRP8) Chapter 7 [Former Chapter 6]: Carbon taxation: Interaction with other instruments – for DISCUSSION and APPROVAL
A draft Preface and Chapter 1 (Introduction and Overview) for the proposed United Nations Handbook on Dispute Avoidance and Resolution was also released for discussion.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
Latest posts by Julie Martin (see all)
- UN committee considers updates to model tax treaty, developing nation tax guidance - April 21, 2021
- UN Committee of Experts approves new digital tax article for model treaty - April 20, 2021
- Leaked copy of US proposal for Pillar One and Two multinational group tax reforms available - April 12, 2021
- US offers new “Pillar One” compromise plan for taxing large multinationals - April 8, 2021
- UN tax committee releases updated model treaty language on automated digital services - April 7, 2021
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