IAFEI Quarterly - 31st Issue

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Italy, Article: United Nations – Tax Developments
By Piergiorgio Valente, Chairman IAFEI International Working
Committee Taxes
The United Nations held in Geneva at the Palais des Nations on October 19 – 23, 2015, the
Among the key issues discussed (see , we may also find the forthcoming update of the United
Nations Model Double Taxation Convention between developed and developing Countries as well as
the next update of the United Nations Practical Manual in Transfer Pricing for Developing Countries.
As far as the next updates of the United Nations Model are concerned, the following issues were
addressed:
- application of treaty rules to hybrid entities (Article 1)
- the meaning of “connected projects” (Article 5)
- the meaning of “auxiliary activities” under Article 8 (Transportation)
- Article 12 on Royalties.
The Tax Committee also discussed the impact of the OECD recommendations on base erosion and
profit shifting and taxation of services.
The New Services Article
A new technical services Article will be included in the new updated version of the UN Model. The
new provision stipulates that technical services will be taxed in the country where they “are
generated/arise” and not necessarily, where they are performed. A number of developed countries
expressed their disapproval about taxing services in those cases where they are not performed in the
country in which they are generated and when there is not sufficient nexus with such country, under
ordinary international tax rules, such to entitle to a charge. All disagreements expressed will be
included in the commentary of this new article.
Notwithstanding the above, the inclusion of the new article in double tax treaties is not expected to be
implemented in the next few years, but it might be used as a bargaining tool whenever negotiating new
treaties.
Counteracting Tax Evasion
In the tax evasion area, the Subcommittee on Exchange of Information submitted a Draft “Code of
Conduct”. Purpose of such “Code of Conduct” is to provide guidance for countries to enhance
transparency and exchange of information aimed at countering international tax evasion. Following
the most recent discussions, a new draft should be issued at the next October session of the
Committee, such draft would also include the shared comments.
Capacity-building
A was submitted by the Secretariat outlining the various publications, courses and
initiatives that are being carried out to assist developing countries in improving their knowledge and
expertise to manage their tax systems efficiently.
IAFEI Quarterly | Issue 31 | 64