Tax treaties

Discussion Draft Release of a new Article 7 (Business Profits) of its Model Tax Convention (revised)


from 24 November 2009 to 21 January 2010


On 24 November 2009, the OECD Committee on Fiscal Affairs approved the release, for public comment, of a revised draft of a new Article 7 (Business Profits) of the OECD Model Tax Convention and of related Commentary changes.


A first version of the new Article and Commentary changes was released on 7 July 2008, (the “July 2008 Discussion Draft”).  As was explained at the beginning of that earlier draft, the new Article and its Commentary constitute the second part of the implementation package for the Report on Attribution of Profits to Permanent Establishments  that the OECD adopted in 2008.


The Committee wishes to thank the 14 organisations and individuals who sent comments on the July 2008 Discussion Draft.


These comments were carefully reviewed and a consultation meeting was held with their authors on 17 September 2009.  The Committee’s subsidiary body responsible for drafting the new Article 7 has concluded that changes should be made to accommodate many of these comments.  This revised discussion draft includes the changes that have been made for that purpose as well as a few minor clarifications, editing changes and corrections. All the changes made to the earlier draft are identified in the revised draft.


The most important change proposed in this revised draft is the replacement of paragraph 3, as it appeared in the July 2008 Discussion Draft, by a broader provision that provides a corresponding adjustment mechanism similar to that of paragraph 2 of Article 9, which applies between associated enterprises.


The revised draft is released for the purpose of inviting comments from interested parties. It does not necessarily reflect the final views of the OECD and its member countries.


The Committee invites interested parties to send their comments on this revised discussion draft before 21 January 2010. It is expected that once finalised, the new Article and the Commentary changes will be included in the next update to the OECD Model Tax Convention, which is tentatively scheduled for the second part of 2010.


Comments should be sent electronically (in Word format) to


Unless otherwise requested at the time of submission, comments submitted to the OECD in response to this invitation will be posted on the OECD website.


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