Preventing Treaty Abuse

I. S. 46The UN’s role in developing countries tax issues

A. UN struggles for developing countries

The focus of this contribution is to analyze the issues of preventing treaty abuse of developing countries, especially the possible considerations of the United Nations (“UN”) on the Base Erosion Profits Shifting project (“BEPS”) effects. BEPS represents the first substantial renovation of the international tax rules in almost a century. It was created originally by the Organisation for Economic Co-operation and Development (“OECD”) and endorsed by the G20 in 2013. As will be explained, one of the most difficult issues in this project is that it has to take into account the interests of both developed and developing countries.

An indication of developing countries’ struggles to attract Foreign Direct Investment may be the large and increasing tax treaty network of many of these countries. Such treaty networks also show the intention of achieving economic development, integration in the global economy and the application of internationally accepted taxation norms. However, developing countries have to accept the existing tax treaty standards, taking into consideration developed countries’ goals...