Tax treaties

OECD releases the Draft contents of the 2008 Update to the Model Tax Convention


The OECD has now released for comments the draft contents of the 2008 update to the Model Tax Convention, which the Committee on Fiscal Affairs intends to finalize in June 2008. 

Part I of the draft update includes a number of technical changes that have not previously been released for comments, Part II includes all the draft changes to the Articles and the Commentary that are proposed as part of the update and Annexes 1 and 2 show the changes that have been made to earlier versions of the proposals related to the tax treaty treatment of services and to the revised Commentary on Article 7.

The contents of the 2008 update result primarily from the following reports, which were all previously released for comments:

  • Revised Commentary on Article 7”.  The revised Commentary on Article 7 that is included in this update was released as a public discussion draft on 10 April 2007.   

The update does not include, however, the revised draft changes to the Commentary on paragraph 2 of Article 15 that were publicly released for comments on 12 March 2007 .

Although these changes had already been revised following their initial release in April 2004, the Working Party has concluded that further discussions of these changes were necessary.

The update also includes a number of technical changes to the Commentary on the Model Tax Convention that have not been previously released for comments and on which comments are now invited. For convenience, these changes are reproduced in Part I of this note with a short background.  These changes deal with the following topics:

  • The concept of “place of effective management”
  • The situation of dual-resident persons who are treaty non-residents under the tie-breaker rule.
  • Certain aspects of the definition of royalties.
  • An interpretation issue related to the distribution of software.
  • Whether days of residence should be taken into account for the purposes of the computation of the 183-day rule of subparagraph 2a) of Article 15.
  • A minor drafting change to paragraph 32.6 of the Commentary on Articles 23 A and 23 B.
  • A minor updating of paragraph 12 of the Commentary on Article 21.

As part of the update, a number of changes and additions will also be made to the observations, reservations and positions of member and non-member countries.  These changes and additions are in the process of being formulated and will be included in the final version of the update.

Comments should be sent electronically, preferably in Word format, by 31 May 2008 to Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration ( Unless the author indicates that his/her comments should not be released, all comments received will be posted on the OECD web site.