Tax treaties

OECD Model Tax Convention: revised discussion draft on tax treaty issues related to emissions permits and credits


19/10/2012 - The OECD Committee on Fiscal Affairs (CFA) invites public comments on a revised discussion draft on tax treaty issues related to emissions permits/credits. This analysis addresses the application of the provisions of the OECD Model Tax Convention to the cross-border trading of emissions permits.

On 31 May 2011, the OECD released a public discussion draft entitled Tax treaty issues related to the trading of emissions permits.

The few comments received on the discussion draft included the suggestion that the scope of the discussion draft be expanded to cover tax treaty issues arising from the trading of CERs (Certified Emission Reduction credits) and ERUs (Emission Reduction Units) as well as tax treaty issues arising from the issuance, as opposed to the trading, of emissions permits, CERs and ERUs.

In accordance with these suggestions, the CFA, through its Working Party 1 on Tax Conventions and Related Questions, has refined the analysis included in the discussion draft to cover the trading of CERs and ERUs as well as treaty issues that would arise if a State decided to tax emissions permits, CERS and ERUs at the time of their issuance rather than upon their alienation.

This revised discussion draft includes the revised analysis of the Working Party. Section 1 provides an overall background explaining the nature of emissions permits, CERs and ERUs. Section 2 analyses the tax treaty issues related to these instruments (collectively referred to as “emission permits/credits”). Section 3 includes proposed changes to the Commentary on the OECD Model Tax Convention that reflect the analysis in section 2.

The CFA invites comments on this discussion draft before 15 January 2013. These comments will be reviewed at the February 2013 meeting of Working Party 1.


Comments on this revised discussion draft should be sent electronically (in Word format) by email to [email protected] and should be addressed to:

Tax Treaties, Transfer Pricing and Financial Transactions Division



Unless otherwise requested at the time of submission, comments submitted in response to this invitation will be posted on the OECD website.

This revised discussion draft is released for the purpose of inviting comments from interested parties. It does not necessarily reflect the final views of the OECD and its member countries.


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