UN tax committee releases draft tax dispute resolution handbook, treaty negotiation manual

The UN Committee of Experts on International Cooperation in Tax Matters has released preliminary draft chapters for a new UN handbook on cross-border tax dispute resolution, a paper outlining proposed updates to a UN manual on negotiating tax treaties, and other documents associated with a meeting now underway at UN headquarters in New York.

 

The documents are being considered by the UN tax committee at its sixteenth session, which will run from May 14- 17.

 

The 25-person UN committee of experts underwent a membership change in August 2017 and, last October, new subcommittees were appointed to conduct the committee’s work, including a new subcommittee on tax dispute avoidance. This new subcommittee, led by Cezary Krysiak, of the Polish Ministry of Finance and George Obell, of the Kenyan Revenue Authority, was charged with drafting a new handbook on tax dispute avoidance and resolution. 

 

The draft chapters released are as follows: 

 

• Chapter 1: Introduction and Overview
• Chapter3: Domestic Procedures
• Possible comments on Chapter 3
• Chapter 4: Special issues faced by developing countries (and LDCs in particular)
• Chapter 5: Tax Treaty Mechanisms to Resolve Cross Border Tax Disputes: The Mutual Agreement Procedure
• Chapter 6: Non-Binding Dispute Resolution (NBDR) Mechanisms
• Chapter 7: Mandatory Dispute Settlement (MDS)

The subcommittee said the drafts are preliminary, are subject to extensive redrafting, and do not represent the consensus view of the subcommittee. 

 

The UN committee of experts also released a report prepared by a subcommittee charged with updating the United Nations Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries.

 

The subcommittee was asked to update the tax treaty negotiation manual to reflect the current version of the United Nations Model Double Taxation Convention between Developed and Developing Countries (UN Model Treaty) and relevant commentaries, focusing on the needs of developing countries and drawing upon other work, particularly a toolkit on tax treaty negotiation authored by the Platform for Collaboration on Tax, a joint effort of the IMF, OECD, UN, and World Bank Group. 

 

The subcommittee report includes a rough draft of a revised manual. The subcommittee also asked the committee of experts to address five questions associated with this work, including whether the manual should continue to advise countries to avoid most favored nations clauses.

 

A note was also released by the UN committee of experts addressing tax treaty entitlements for investments made through collective investment vehicles (CIVs) and inviting discussion on whether there is a need to take up tax issues involving CIVs in upcoming tax committee work. The note suggests that the committee might want to introduce changes to the commentary to the UN model tax treaty to clarify aspects of CIV taxation.

 

Another report released was prepared by a subcommittee charged with updating the United Nations Handbook on Selected Issues in the Taxation of the Extractive Industries for Developing Countries. The document reported that the subcommittee had not made much progress on its work so far; subcommittee meetings are planned for late June.

 

 Finally, a note was released describing the Secretariat’s intention to revise 2007 draft guidelines on the tax treatment of official development assistance projects.