aties which would be acceptable to both groups of countries and would entirely protect their respective revenue interests. Following that resolution the committee comprising of the Group of Experts on Tax Treaties between developed and developing countries, which had on board tax officials and experts from these particular countries was set up in 1968 by the Secretary-General. The experts were appointed in their own personal capacity.
The “Group of Experts” reviewed the draft United Nations Model Convention at its Eighth Meeting, held at Geneva from 10 to 21 December 1979, and adopted the final text of the Convention and of the Commentary thereon. In 1980, the United Nations published the “United Nations Model Double Taxation Convention between Developed and Developing Countries”, which was preceded in 1979 by the “Manual for the Negotiation of Bilateral Tax Treaties between Developed and Developing Countries”. On 28 April 1980 by the resolution 1980/13 the Economic and Social Council renamed the Group of Experts as “Ad Hoc Group of Experts on International Cooperation in Tax Matters”. At present, the Group of Experts is composed of 25 members—10 from developed countries and 15 from developing countries and economies in transition. The process of revision and updating of the UN MC between developed and developing countries started in 1995 and ended in 1999 at the Ninth Meeting of the “Group of Experts” (United Nations Model Double Taxation Convention between Developed and Developing Countries).
The United Nations Model Convention (UN MC) favors capital importing countries as opposed to capital exporting countries and it was set for use between developing countries and developed countries.
1.4 WHY ARE TAX TREATIES NECESSARY?
Tax treaties are necessary because they provide solutions to the connecting factor conflicts. The other advantages of tax treaties can be summarized as follows:
Provide fiscal certainty.
Avoid and relieves double tax.
Allocate taxing rights.
Help in dealing with tax evasion.
Assist in treaty negotiation and common interpretation.
Tax treaties also contain some special provisions to:
Prevent tax discrimination;
Permit exchange of tax information and
Establish mutual agreement procedure for tax disputes.
The other benefits of tax treaties are:
Provide common tax definitions;
Define forms of taxable income;
Set specific basic and geographical source rules;
Define taxable presence;
Resolve dual residence status;
Limit domestic taxing rights;
Provide tax incentives for investment (“tax sparing”);
Provide additional tax benefits and
Assist in international tax planning
1.5 MODEL TAX TREATIES
Over the last few decades, the number of bilateral tax treaties has extensively increased. The United Nations Model Double Taxation Convention between Developed and Developing Countries (United Nations Model Convention) and the Organization for Economic Cooperation and Development Model Tax Convention on Income and on Capital (OECD Model Convention) provide models for countries to use in negotiating the terms of their treaties and are regularly updated (United Nations New York, 2013). These models are adapted by each and every sovereign state to suit its own needs and they are not exactly the same as the UN MC or OEC
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