Special Features of the UN Model Convention

1. S. 174Introduction

A considerable extent of base eroding and profit shifting (hereinafter “BEPS”) activities of multinational enterprises (hereinafter “MNE”) “relate to distortions of intercompany transfer prices”. In light of this, transfer prices of MNEs are increasingly targeted by tax authorities and have become a major challenge in tax audits worldwide. Additionally, there is an increased public focus on transfer prices of MNEs. Hence, even if tax risks do not materialize, MNEs have to face reputational challenges. This growing focus on transfer pricing is driving an increasing amount of work by supranational organizations such as the Organization for Economic Co-Operation and Development (hereinafter “OECD”) and the United Nations (hereinafter “UN”). This work of supranational organizations has intensified the activities of tax authorities worldwide to harmonize their approach in order to eliminate what they perceive as inappropriate tax avoidance. The resulting comprehensive transfer pricing systems and regulations have increased the workload of tax authorities and the need for highly educated specialists, as well as the administrative burden on the side of the taxpayer. Meeting...