The UN Committee of Experts on International Cooperation in Tax Matters is holding its 23rd session as a series of virtual meetings between 19 and 28 October 2021. The issues to be covered include the following:
Tax and the Sustainable Development Goals (SDGs)
The UN Committee promotes SDG 17 (partnerships for the goals) through international tax cooperation and the support for revenue mobilisation of developing countries. Previous work of the Committee has had a practical relevance for efforts to achieve the SDGs, including the work on environmental and extractive industries taxation; tax exemptions of government-to-government aid; and the work on double tax treaties and transfer pricing. The Committee will decide on how to continue this work for the period 2021 to 2025.
Tax and the Pandemic
There will be discussion of the impact of the pandemic on government policy and businesses, and of issues arising during the pandemic that may affect domestic resource mobilization.
UN Model Tax Convention
The Committee will identify issues for future discussion. The inclusion of computer software in the definition of royalties has been considered and could be completed by 2023. Other issues include consideration of permanent establishments with respect to insurance activities; the treatment of self-initiated adjustments in the commentary on articles 7, 9 and 25; changes to article 25 (mutual agreement procedure); amendments to the commentary on article 15 related to payments made upon termination of employment; tax treaty issues relating to emissions permits or credits; application of the UN Model to sovereign wealth funds; treatment of accrued interest in the commentary on article 11; and tax treaty provisions related to the exploration and extraction of natural resources. The Committee may also consider the extent to which a tax treaty can result in increased taxation.
Digitization and other opportunities to improve tax administration
Domestic revenue mobilization is important in achieving sustainable development. The Committee will look at issues involved in assisting tax authorities to digitalize their operations and improve tax administration.
Transfer Pricing
The Committee will decide on establishing a Subcommittee on Transfer Pricing for the period from 2021 to 2025. Potential topics for consideration include practical risk assessment tools; transfer pricing aspects of marketing or trading hubs; and simplification measures. The Subcommittee would need to consider the outcome of the BEPS 2.0 project to examine the interaction between non-arm’s length taxing rights for certain large multinationals under amount A of Pillar One and the application of the arm’s length principle for most companies. The safe harbour rules under amount B of Pillar One also require consideration.
Tax Issues Related to the Digitalized and Globalized Economy
The Committee is to consider how to proceed on issues related to the digitalized and globalized economy. A smaller group of the Committee could be appointed to consider issues, possible options and working methods and make recommendations to the next session. The previous Subcommittee considering the issues drafted Article 12B on Automated Digital Services and its attendant Commentary in the 2021 UN Model Double Tax Convention. Future discussion will cover the digitalized and globalized” economy, as many of the issues relate not just to highly digitalized businesses, but to multinational enterprises (MNEs) more generally.
Other
The Committee will also be considering environmental taxation, capacity building, tax transparency, wealth taxes, dispute resolution and the relationship between tax, trade and investment agreements.
