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Organisation for Economic Cooperation and Development: Proposed Changes to Model Tax Convention Commentary and Other Developments

(Feb. 18, 2010)

Publication of Comments on Model Tax Convention Commentary and Proposed New Article 7

In late November and early December 2009, the Committee on Fiscal Affairs of the Organisation for Economic Co-operation and Development (OECD) released for public comment several draft documents containing proposed changes to the Commentary on the OECD Model Tax Convention. It was reported on February 10, 2010, that the OECD has now published the public comments on these draft reports:

  • The Granting of Treaty Benefits to the Income of Collective Investment Vehicles [CIVs] (involving the extent to which either the CIVs or their investors are entitled to the treaty benefits on CIV-received income);
  • Tax Treaty Issues Related to Common Telecommunications Transactions; and
  • The Application of Tax Treaties to State-Owned Entities, Including Sovereign Wealth Funds.

(For the published Public Comments, see OECD website, Feb. 10, 2010, available at,3343,en_2649_33747_44571967_1_1_1_1,00
, &,3343,en_2649_33747_44581361_1_1_1_1,00
, respectively.)

The Committee on Fiscal Affairs is reportedly considering including the proposed changes related to telecom transactions and state-owned entities in the next update to the Model Tax Convention, tentatively scheduled for the latter half of 2010. (Luis Nouel, Draft on Tax Treaty Issues Related to Common Telecommunication Transactions – Comments Published & Draft on the Application of Tax Treaties to State-Owned Entities – Comments Published, both in IBFD TAX NEWS SERVICE, Feb. 11, 2010, subscription newsletter from

In addition, on January 28, 2010, the OECD announced the publication of public comments received on a consultation draft of a proposed new article 7 (on business profits) of the Model Tax Convention. (Public Comments on the Revised Draft of the New Article 7 of the OECD Model Tax Convention, OECD website, Jan. 28, 2010, available at,3343,en_2649_33747_44461574_1_1_1_1,00.
.) According to the OECD, “[t]he new Article and its Commentary constitute the second part of the implementation package for the Report on Attribution of Profits to Permanent Establishments that the OECD adopted in 2008.” (Id.)

Proposed Standardized Documentation for Cross-Border Tax Claims

On February 8, 2010, the OECD released for public comment draft documentation on cross-border tax claims, with a view to streamlining the procedure “for portfolio investors to claim reductions in withholding rates pursuant to tax treaties or domestic law in the source country.” (OECD Releases Draft Documentation for Cross-Border Tax Claims, OECD website, Feb. 8, 2010, available at,3343,en_2649_33747_44550152_1_1_1_1,00.

The aim is to provide standardized documentation usable by those countries willing to adopt OECD “best practices” in this area. The deadline for submission of comments is August 31, 2010. (Id.)