Special Features of the UN Model Convention

1. S. 592Introduction

Over the last decades, business models changed, and multinational enterprises became more mobile as the focus shifted from substantial manufacturing to services and intangibles. In this era of opening borders with a globalized economy, some multinational enterprises have successfully conducted their tax planning strategies through the exploitation of gaps and mismatches in international tax rules in order to artificially shift profits to low or non-tax jurisdictions.

Tax avoidance practices by multinational enterprises are a global issue; however, profit shifting out of developing countries can have a significant negative impact on their prospects for sustainable development. It is estimated that $ 100 billion in annual tax losses are borne by developing countries due to, for example, only conduit foreign direct investment through tax havens.

In reaction, international organizations have concentrated their efforts in solving problems related to tax avoidance. Indeed, the OECD at G20´s request created the Base Erosion and Profit Shifting (BEPS) project in which several measures have been put forth and crystallized in 15 actions. The publication of the 2017 update of the...