By Julie Martin, MNE Tax
The UN Committee of Experts on International Cooperation in Tax Matters has agreed to add a new, optional, article to the UN model tax treaty that would grant additional taxing rights to countries where an automated digital services provider’s customers are located.
Although the exact text must still be ironed out, the Committee voted at its 21st session to include a version of proposed Article 12B, discussed in detail in an earlier MNE Tax article, in the UN Model Double Taxation Convention between Developed and Developing Countries, said subcommittee members William Babatunde Fowler and Aart Roelefsen in a statement.
Under optional Article 12B, income from automated digital services can be taxed in the country where the customer is located even if the company providing the service has no fixed place of business there. The article defines income from automated digital services very broadly to include income from online advertising services, online search engines, social media platforms, online gaming, and cloud computing services.
Fowler and Roelefsen, who are co-coordinators of the UN Committee of Expert’s Subcommittee on Tax Challenges Related to the Digitalization, said that the Committee of Experts also agreed that a minority view should be included in the commentary to Article 12B.
The Committee of Experts will be asked to vote on the final text of the article and commentary at their 22nd session, to be held in April 2021, Fowler and Roelefsen said. A series of subcommittee meetings will be held in advance of the 22nd session and observers will be invited to join a December session.
Julie Martin
Founder & Editor at MNE Tax
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].
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Julie can be reached at [email protected].
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