Although rules on the allocation of taxing rights for fees for technical services have been provided for in bilateral tax treaties by African, Asian, and South American countries for decades, it was only in the 2017 update that the UN Model Tax Treaty included Article 12A on the matter, thus suggesting its inclusion in the tax treaty network of its Member States. Consequently, from a cross-border perspective, the interpretation of Article 12A is of great importance for both taxpayers and tax authorities. This book presents the first comprehensive analysis of the scope of technical services in comparison to ordinary (non-technical) services and the differentiation between Article 12A and other allocation rules of the UN Model. The book’s analysis focuses on the interpretation of the concept of technical services by examining the historical evolution of Article 12 of the OECD and UN Models and the systematic context in which it is embedded. Aspects of this analysis examined include the following: the base-erosion principle as justification for establishing source taxing rights without the physical presence of the service provider in the state in which fees for technical services arise; whether the term ‘technical’ is sufficiently defined in the Commentaries to the UN Model or whether it shall be ascribed a different meaning to increase legal certainty for tax authorities and taxpayers; relevance of the OECD Model and its Commentaries as the basis for the UN Model and its Commentaries; rules of precedence concerning the application of Article 12A in relation to the other allocation rules of the UN Model; the connection between royalties and fees for technical services; application of Article 12A UN Model to challenges arising from the digitalized economy; and the allocation of taxing rights for fees for technical services rendered in a third state. Tax treaties of selected African countries are examined, as these countries were the earliest adopters of the concept of fees for technical services into their tax treaty network. The book also provides an overview of literature and jurisprudence on country practices in Brazil, India, and other countries, as well as relevant documents of international organizations. This book provides practitioners, government officials, and academics with a deep understanding of the interpretation and application of Article 12A UN Model. It will prove of great value in preparing for tax treaty negotiations and also in informing and advising enterprises that intend to conduct business in developing countries through the provision of specialized services.
This thesis analyzes the meaning of the new fees for technical services provision under the UN and OECD Model Treaty Convention. It provides a critical evaluation on the general treaty interpretation and application of double tax avoidance treaties. First the author discusses the policy rationale and justifications provided to introduce fees for technical services. Basic international tax principles that adhere to source versus residence taxation are also dealt with. In addition, he analyzes the general rules of treaty interpretation, the role and status of commentaries, the application of article 3 (2) and qualification conflicts, and finally the meaning and interpretation of fees for technical services.
One of the most important changes in the update of the UN Model of 2017, released in May 2018, is the introduction of a new Article 12A dedicated to fees for technical services. This article analyses the policy considerations which underly the new provision and describes past and current tax treaty practice with regard to the allocation of taxing rights on fees for technical services. It examines the scope of the new model Article 12A and its interaction and potential overlap with items of income covered under Article 5 and Article 7 (permanent establishment and business profits), Article 12 (royalties) and Article 14 (independent services) of the UN Model. In the final section, it analyses how the new provision might play a significant role in the taxation of (certain business models of) the digital economy.
Key features · Indian approach to tax digital economy · TDS on Platform sellers (section 194-O) · Equalisation Levy · Amendment to tax residency provisions · Significant Economic Presence (Explanation 2A) · Taxation of Advertisement and data (Explanation 3A) · APA/SHR framework for attribution of profits · Amendment to section 90 · Synthesised Text of tax treaties · Triangular cases
The provision of international services has increased enormously, mainly due to the precipitous growth of the digital economy. Accordingly, the interpretation and application of double taxation conventions (DTCs) to income from services has become a dominant focus in the international taxation. This multiple-award-winning book is an indispensable tool for practitioners and a major contribution to the debate about tax reform. It responds to the need for a comprehensive overview of the tax opportunities and risks relating to the provision of international services. It also offers the rst in-depth analysis of the taxation of income from services vis-à-vis the multilateral instrument (MLI) resulting from the OECD’s Base Erosion and Pro t Shifting (BEPS) initiative. With the thorough analysis of the international taxation of income from services over the last two centuries, the author sheds new light on present tax policy debates and develops workable proposals for bringing brick-and-mortar DTCs into the digital reality. With an abundance of case studies, treaty interpretations, appraisals of policy discussions, and practical solutions, the author examines every aspect of the subject, including the following: – the Model DTCs of the OECD, the United Nations, Germany, and the United States, their similarities and differences; – relationships among the MLI, the Model DTCs, and speci c DTCs; – development of the provisions dealing with services in the DTCs; – how tax authorities and courts of different countries (e.g., the United States, Germany, Brazil, India, and China) apply DTC provisions on the taxation of international services; – opportunities and risks relating to different business practices, such as the subcontracting of services provisions, the hiring-out of labour, the secondment of employees, and the engagement of contract and toll manufacturers; – practical questions about the taxation of different distribution models – from fully edged distributors to commissionaires; – challenges and proposals relating to the differentiation between various types of services under DTCs; – the permanent establishment concept; – to what extent the structure, purposes, and scope of DTCs differ from those of the General Agreement on Trade in Services (GATS); – how changes in the US Model DTC of 2016 affect international service provisions; and – proposed changes to amending the OECD and UN Model DTCs. Viable proposals to simplify DTC provisions dealing with service income and align them with current challenges such as the digital economy and the increasing volume of remote services are offered, particularly in light of the likely impact of the ‘BEPS package’ and its subsequent MLI. This book is poised to become one of the key practice resources for tax lawyers, in-house counsel, and policymakers in the coming years. Interested academics too will bene t from the author’s skill in recognizing the ongoing role of taxation fundamentals in the major revolution currently underway.
This book covers all major topics in international tax law, ranging from permanent establishments and capital gains to the taxation of royalties and technical services, transfer pricing, and General Anti-Avoidance Legislation. It also highlights the Indian “story” of status vs. contract by examining four areas of controversy: permanent establishments, FTS (Fees for Technical Services) & Royalty, capital gains, and transfer pricing. The book approaches the subject of international taxation from two opposing yet related perspectives. One is the tax planning perspective, which involves contracts entered into by individuals and companies; the other is that of state regulation through increasingly complex legislation. The area of permanent establishments demonstrates the dominance of contracts over status, at least with respect to Indian tax law. However, some recent judicial decisions in this area demonstrate the susceptibility of contracts to status-related arguments. The areas of FTS & Royalty as well as those of capital gains and transfer pricing demonstrate the Indian government’s attempts to establish, through legislation, the dominance of status over contracts. Whereas traditional textbooks on international tax law focus on the legal technicalities of tax legislation, this book provides tax scholars and lawyers with an understanding of tax planning and tax legislation side by side in each chapter, specifying the respective kind of actual or anticipated tax planning activity that in turn prompted a legislative response. As such, it offers readers a contextual and practical introduction to the complexities of international tax law, as well as an in-depth analysis of the latest debates and controversies in this area.
Detailed research on the UN Model Convention’s unique features The UN Model Convention has a significant influence on international tax treaty practice and is especially used by emerging and developing countries as a starting point for treaty negotiations. Driven by the aim to achieve consistency in the international tax treaty practice, the structure and content is, to a large extent, similar in the UN Model and the OECD Model. However, whereas the OECD has historically focused its efforts on issues mainly relevant for developed countries, the UN Tax Committee has continuously attempted to specifically take into account tax treaty policies for developing countries when drafting and amending the UN Model Convention. Compared to the OECD Model Convention, the UN Model Convention aims at giving more weight to the source principle. Popular examples are the PE definition in the UN Model which provides for a lower threshold than Article 5 of the OECD Model or Article 12A on Fees for Technical Services which has been introduced with the latest amendment of the UN Model Convention 2017 and allows for a withholding tax to be levied on payments to non-residents when the payer of the fee is a resident of that contracting State irrespective of where the services are provided. Interestingly, in the discussions of the tax challenges arising from the digitalization of the economy, the OECD and the G20 are also exploring options to allocate more taxing rights to the jurisdiction of the customer and/or user, i.e., the ‘market jurisdictions’. As this has traditionally been the focus of the UN Model Convention, its unique features and developing countries’ practices could be taken into account when exploring new nexus rules that are not constrained by the physical presence requirement. This book contains the master’s theses of the full-time LL.M. program 2018-2019 for which ‘Special Features of the UN Model Convention’ has been chosen as the general topic. With this book, the authors and editors do not aim at discussing each article of the UN Model Convention but rather focus on the unique features of the UN Model Convention, which are explored in detail. This is supplemented with an evaluation of the function and relevance of the UN Tax Committee in the international tax policy discussion and with an analysis of the influences of the OECD's BEPS project on the UN Model.he OECD's BEPS project on the UN Model.
By showcasing the work of technical services, and the ground-breaking changes they have encountered, this edited collection provides readers with an opportunity to re-assess the opportunities and challenges for library administration, and to understand how libraries should be managed in the future.
This book is India's first 'ready reckoner' specifically focused on the complexities of international taxation and cross-border transactions. It provides comprehensive coverage of essential topics, including the basic provisions of India's taxation scheme, the concept of residence, and the crucial role of Double Taxation Avoidance Agreements (DTAA). The book also discusses the interaction between DTAAs and the Income-tax Act, guiding how to read a DTAA, determine eligibility, and resolve conflicts between a DTAA and domestic tax laws. This handbook is helpful for tax professionals, legal advisors, tax practitioners, tax officers and businesses dealing with cross-border transactions, such as payments to non-residents, transactions involving non-residents, digital transactions, and the withholding tax obligations of residents. The second edition has been updated with the latest amendments from the Finance (No. 2) Act, 2024, and features expanded discussions, additional material, more case studies, and judicial precedents, providing in-depth analysis and practical insights into international taxation. The Present Publication is the 2nd Edition and has been amended by the Finance (No. 2) Act, 2024. This book has been authored by CA Daksha Baxi & Adv. Surajkumar Shetty, with the following noteworthy features: • [Comprehensive Coverage] Covering a broad spectrum of topics, the book details the basic provisions, residential status, the role and application of Double Taxation Avoidance Agreements (DTAA), and their interaction with the Income-tax Act. It provides a step-by-step guide on how to read a DTAA, determine eligibility, and resolve conflicts between DTAA and the Income-tax Act • [In-depth DTAA Analysis] It examines multiple DTAAs to demonstrate how tax implications can vary across treaties or remain consistent, providing clear explanations for these outcomes. This detailed analysis helps readers understand the nuanced application of DTAAs in various cross-border scenarios • [Detailed Chapter Organisation] The chapters are organised to cover different types of income and transactions, such as rental income, business income, dividends, interest, royalties, technical services, capital gains, employment, and more. This structure brings together all relevant provisions of the Income-tax Act, including appropriate cross-references, making navigation straightforward for users • [Taxability Evaluation] The book provides comprehensive guidance on evaluating the taxability of cross-border transactions using the Income-tax Act, DTAA and references to rules, forms, circulars, and landmark judicial precedents. This holistic approach equips readers to assess tax implications accurately and effectively • [Practical Guidance for Advisors] Throughout the book, notes provide valuable insights into how advisors should approach transactions, the investigations required, and the application of the principles of the Income-tax Act and DTAA. This practical advice helps professionals offer sound, informed guidance on cross-border tax matters • [Simplified Explanations] Complex concepts such as Place of Effective Management (PoEM), Permanent Establishment (PE), and business connections are explained in simple language, supplemented with practical examples and judicial precedents. Relevant statutory texts are reproduced verbatim for easy reference, aiding readers in understanding and applying the law • [Special Focus on Investment Structures] The book discusses the taxation of Foreign Portfolio Investors and various investment funds, including Alternative Investment Funds (AIFs), Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs), and Securitisation Trusts. It specifically addresses scenarios involving non-resident investors in these structures • [Litigation and Compliance] It provides an overview of provisions related to litigation proceedings under the Income-tax Act, Mutual Agreement Procedures (MAP) under DTAA, the Authority for Advance Rulings (AAR), equalisation levy, transfer pricing provisions, general anti-avoidance rules (GAAR), and special provisions for International Financial Services Centres (IFSC). This comprehensive coverage ensures professionals are well-prepared for compliance and dispute resolution • [Illustrative Case Studies] To enhance practical understanding, the book includes numerous illustrations, practical examples, and comprehensive case studies. These are designed to cover various aspects of cross-border transactions, providing readers with insights into the subtleties and practical challenges involved The structure and layout of the book is as follows: • [25 Well-structured Chapters] dedicated to a specific area of international taxation, including detailed discussions on relevant provisions and practical guidance • [Cross-references] to other chapters where necessary, ensuring clarity and ease of navigation and enhancing the reader's ability to understand complex interrelationships within tax laws • [Appendix] includes formats for relevant forms, updates on withholding tax rates, summaries of abbreviations, and comprehensive lists of withholding tax rates under India's existing DTAAs, serving as a practical toolkit for professionals The contents of the book are as follows: • Tax System for Non-Residents in India – An Overview • Tax Treaties • Setting Up a Business in India • Classification of Income • Determining Eligibility to Claim Benefits of DTAA • Taxation of Rental Income • Taxation of Business Income • Taxation of Dividend Income • Taxation of Interest Income • Taxation of Royalty Income • Taxation of Income from Fees for Technical Services • Taxation of Capital Gains • Taxation of Employment Income • Taxation of Non-Resident Indian • Taxation of Foreign Portfolio Investors • Taxation of AIFs, REITs, InvITs, Securitisation Trust • Transactions Attracting Transfer Pricing Regulations • Business Reorganisations • Discontinuance of Business and Dissolution of Indian Company • Foreign Tax Credit • Making Payments to NRs & Obtaining Lower Withholding Certificate • Assessments, Appeals and Dispute Resolution • General Anti-Avoidance Rules • Miscellaneous • Case Study to Determine Taxability of NR, under the IT Act & DTAA
