Special Features of the UN Model Convention

1. S. 372Introduction

The taxation of income arising from the provision of cross-border services is a rather complex issue. This is due to the clash of positions that normally exists between developed countries that push for residence taxation and the developing countries that favour source taxation instead. This conflict of opinions often results in difficulty to reach consensus on the allocation of taxing rights. The main reason behind this is that the majority of developing countries are typically known to be capital importers whereas developed countries are usually capital exporters.

Both the OECD Model Tax Convention (hereinafter referred to as the ‘OECD Model Convention’) and the United Nations Tax Model Convention (hereinafter referred to as the ‘UN Model Convention’) are comprised of various articles that deal thoroughly with the taxation of different types or classes of services depending on the nature of the service or of the occupation of the individual executing said service. For instance, shipping and air transportation, services performed by artistes and sportsmen, and government services are all specifically addressed in the articles of said model conventions.

There are great...