The UN has published a new version of the Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries. First published in 1978, the Manual is prepared by the UN’s Committee of Experts on International Cooperation in Tax Matters.
The Manual provides a guide to all aspects of tax treaty negotiation, including a brief description of the Articles of the United Nations Model Double Taxation Convention between Developed and Developing Countries. While every country should develop its own policy and define its objectives in relation to tax treaties, the Manual seeks to provide practical guidance on all aspects of tax treaty negotiation, including on how to prepare for and conduct negotiations. Treaty negotiators in developing countries, especially those with limited experience, are therefore encouraged to use this Manual in preparing for tax treaty negotiations in the light of their country’s policy framework and the intended outcomes they wish to achieve.
The structure of the Manual
The manual comprises of 4 sections:
- Section I of the Manual introduces the main principles which underlie double tax treaties, including the concepts of residence and source.
- Section II provides a comprehensive overview of the practical steps to be taken before, during and after the negotiation of each tax treaty.
- Section III cater the main core of negotiation for tax treaties
- Section IV deals with the improper use of tax treaties, which may occur when taxpayers enter into certain transactions or arrangements for the purpose of obtaining treaty benefits which would not otherwise be available to them.
Important changes have been made to Section II, which has been expanded and revised to better cover the process of negotiating and concluding tax treaties (how to prepare a model, how to assign roles to the members of a negotiating team, etc.).
Main changes were made to Section III, which summarizes the main policy and drafting issues arising during the negotiation of the typical provisions of tax treaties. These changes were made necessary by the large number of changes that were made in 2017 to both the UN and OECD models, which are the basis on which almost all tax treaties are negotiated. Section IV on Improper Use of Tax Treaties was similarly amended to reflect the substantial number of antiabuse rules added to the U.N. and OECD models in 2017.
Source: United Nations