The UN Committee of Experts on International Cooperation in Tax Matters held their twentieth session in the form of a series of virtual meetings from 22 to 26 June 2020.

In the meetings the Committee emphasised the need to provide guidance and capacity building support on tax issues relevant to addressing inequalities in developing countries following the crisis. The work of the UN is an important contribution to domestic resource mobilisation to help the recovery from the health and economic crisis and to further the aims of the Sustainable Development Goals.

UN Model Tax Treaty

Updates are to be made to the UN Model in relation to capital gains on indirect transfers. The UN Tax Committee also considered amendments to the commentary on Article 5 (permanent establishment); clarification of the concept of beneficial owner; the application of Art 12 (royalties) to software payments; the application of Art 13 (5) to transparent entities; and amendments in relation to collective investment vehicles (CIVs), pension funds and real estate investment trusts (REITs).

Practical Manual on Transfer Pricing

A new chapter on financial transactions has been completed and there are to be changes relating to comparability; updates on group synergies and central procurement functions.

Taxation of the Digital Economy

After considering a paper presented to them on taxation of the digital economy the Committee appointed a group representing developing countries to draft a proposal for an optional provision of the UN Model on this issue. The draft provision which is to be produced by 31 July 2020 will take into account the practical difficulties that may be encountered in implementing any recommended provisions.

Handbook on Taxation of Extractive Industries

A new chapter on tax incentives was approved by the Committee.

Handbook on Environmental Taxation

A new chapter concerning the design of carbon taxation has been approved by the Committee. Some other draft chapters are being published for public comment.

Manual on Dispute Avoidance and Resolution

The new chapter on mutual agreement procedures and arbitration has been approved.

ODA Projects

The Committee moved forward on the preparation of updated guidelines on the tax treatment of official development assistance (ODA) projects. Some of the text may have become outdated since the original guidelines were drafted and updates may need to refer to developments such as progress on the exchange of tax information; international guidelines on VAT; and the adoption of the Sustainable Development Goals. More coordination may be needed with the World Customs Organisation (WCO) on customs issues.