The OECD`s model convention on taxation was born. He was an interesting baby. The so-called London and Mexican models of the League of Nations are clearly in the family tree, but the direct parents were the senior tax officials of the European countries who launched in 1956 a joint project to develop uniform tax rules under the aegis of the OEEC. Like all parents, they didn`t know what their baby would be. This approach to soft law requires adaptability and transparency. Changes to the model are always published in advance as drafts and Member States have time to discuss and decide whether further changes are needed or not. Ongoing dialogue with businesses and non-members is essential to defining adequate international tax rules and, over the years, the model has always drawn strength from the demands of tax authorities and the evolution of the economic experience. Consider the 2008 update, which has just been adopted with a series of interesting changes based on OECD reports in recent years. For example, a binding arbitration provision is introduced to resolve difficult unresolved issues through the procedure so called mutual agreement, with broader and more precise comments on how the mutual agreement procedure itself should work. Today, more than 3,000 tax treaties based on the OECD model are in force worldwide. Some 30 non-OECD countries expressed their views on this model. We do not always agree, but at least we know where we do not agree. A project on the transfer pricing aspects of corporate restructurings is now on the agenda www.oecd.org/ctp/tp/br.
Please submit your comments by February 19, 2009. The OECD model agreement on taxation helps to solve these problems, although it is not legally binding. On the contrary, the OECD makes a recommendation based on the common position of its members, who in turn commit to follow the model and its comments, while taking into account their reservations when concluding or revising bilateral tax treaties. The voluminous and regularly updated comments that accompany the model provide guidance on accepted interpretations of the main text and now serve as a very useful reference for taxpayers, tax administrations and the courts, whether in OECD countries or elsewhere in the world. 4. Find a way to speed up the contract update process based on the model. Half a century ago, the budget committee of the European Organisation for Economic Cooperation (OEEC), which later became the OECD, published a first draft on what a model contract on international taxation could be. The global economy began to integrate more in the 1950s and the intention was to support businesses and governments by helping to avoid double taxation and prevent tax evasion.
The question to be solved was quite simple: how could governments assert their legitimate taxation on growing international companies without worrying about being unfairly taxed in the various legal systems in which they operate? A comprehensive draft was submitted in 1963, although the model double taxation agreement was not published until 1977. The 1963 project was essentially the consolidation of four previous projects, the first of which was published in 1958. That is why we assume that the birth of the OECD model was July 1, 1958. Initially, fewer than 15 countries participated in the drafting of the first text; Until 1963, the OECD had expanded to 20 countries.