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UN Updates Model Double-Taxation Agreement

UN Updates Model Double-Taxation Agreement

The UN continues efforts to eliminate double taxation with a newly revised tax agreement.


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The UN has released the 2017 UN Model Double Taxation Convention between Developed and Developing Countries. This update incorporates some of the changes from the OECD's 2017 Model Tax Convention, which will curtail entities from attempting base erosion and profit shifting.

Some of the Convention's main updates from its earlier 2011 version include the following:

  • A new preamble providing clear emphasis that treaties should not create opportunities for tax avoidance or evasion, including through treaty shopping
  • A "fiscally transparent entity" clause under Article 1 "persons covered", as well as a saving clause, which clarifies that residence taxation is generally preserved under tax treaties
  • A new "tie breaker" rule for determining the treaty residence of dual-resident persons other than individuals
  • Modifications to prevent the avoidance of permanent establishment status
  • Amendments to the circumstances in which a lower rate applies for dividends on direct ownership of shares above a 25% threshold
  • A new provision regarding source taxation of fees for technical services
  • Modifications to expand the "land rich company rule", which is applicable to gains from a disposition of shares or comparable interests (such as interests in a partnership or trust), that have derived more than half of their value, directly or indirectly, from immovable property
  • New provisions relating to entitlement to treaty benefits, including a "limitation on benefits" rule, a third-state permanent establishment rule and a general anti-abuse rule.

    For more information, contact your KPMG adviser.

Information is current to June 05, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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