On November 21, 2017, the OECD Council approved revisions to the OECD Model Income Tax Convention (the OECD Model), together will revisions to the accompanying Commentaries. The 2017 revisions will be incorporated in a revised version of the OECD Model and Commentaries.
The OECD Model is a common reference point for countries engaged in treaty negotiations. The 2017 OECD Model makes significant changes to many of the operative rules that will impact the availability and scope of treaty benefits for taxpayers resident in countries that enter into revisions to existing treaties or negotiate new treaties based on the OECD Model provisions. The revisions to the Commentaries will be of more immediate importance to the application and interpretation of current U.S. income tax treaties as they can serve as an aid to interpreting treaty language comparable to the language in the OECD Model, and such Commentaries may also be looked at by courts for the same purpose.
Included in the revisions are updates to the positions of the OECD Model and Commentaries by countries that are not members of the OECD but participated in the process, adding greater transparency to how these non-OECD countries may interpret their own tax treaties and what policy positions they may take in treaty negotiations.
We will be providing a more detailed analysis in a subsequent insight piece.