Base erosion and profit shifting
Public comments received on the draft contents of the 2017 Update to the OECD Model Tax Convention
11/08/2017 - On 11 July 2017, the OECD released the draft contents of the 2017 Update to the OECD Model Tax Convention. Interested parties were invited to provide comments with respect to the following parts of the 2017 Update to the OECD Model Tax Convention that had not previously been released for comments:
- Changes to paragraph 13 of the Commentary on Article 4 related to the issue whether a house rented to an unrelated person can be considered to be a “permanent home available to” the landlord for purposes of the tie-breaker rule in Article 4(2) a).
- Changes to paragraphs 17 and 19 of, and the addition of new paragraph 19.1 to, the Commentary on Article 4. These changes are intended to clarify the meaning of “habitual abode” in the tie-breaker rule in Article 4(2) c).
- The addition of new paragraph 1.1 to the Commentary on Article 5. That paragraph indicates that registration for the purposes of a value added tax or goods and services tax is, by itself, irrelevant for the purposes of the application and interpretation of the permanent establishment definition.
- Deletion of the parenthetical reference “(other than a partnership)” from subparagraph 2 a) of Article 10, which is intended to ensure that the reduced rate of source taxation on dividends provided by that subparagraph is applicable in the case where new Article 1(2) would have the effect that a dividend paid to a transparent entity would be considered to be income of a resident of a Contracting State because it is taxed either in the hands of the entity or in the hands of the members of that entity. That deletion is accompanied by new paragraphs 11 and 11.1 of the Commentary on Article 10.
The OECD is grateful to the commentators for their input and now publishes the public comments received.
It is expected that the contents of the 2017 Update to the OECD Model Tax Convention will be approved and published later in 2017.