Introduction to the Law of Double Taxation Conventions

S. 888 Taxes covered

8.1 Taxes on income

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The OECD Model covers taxes on income and on capital. The manner in which they are levied is irrelevant. The taxes must be imposed on behalf of a contracting state or of its political subdivisions or local authorities (cf. m.no. 192). The OECD Model provides for a general definition of taxes on income: all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property, as well as taxes on the total amounts of wages or salaries paid by enterprises.

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DTCs regularly contain an exemplary list of taxes on income to which the treaty is applicable. When DTCs are patterned after the OECD Model, this list is found in Art. 2(3) and is introduced by the following sentence: “The existing taxes to which the Convention shall apply are in particular: ...”. The use of the term “in particular” clarifies that the list is not exhaustive but merely serves to illustrate the general definition found in Art. 2(1) and (2) OECD Model.

8.2 Taxes on capital

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The OECD Model is also applicable to taxes on capital that are imposed on behalf of a contracting state or of its political subdivisions or local authori...