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United Nations Handbook on Selected Issues in Administration of Double Tax Treaties for Developing Countries

image of United Nations Handbook on Selected Issues in Administration of Double Tax Treaties for Developing Countries

Double tax treaties play a key role in the context of international taxation, by reducing or eliminating double taxation over cross-border income, thus encouraging international investment and global economic growth, and by enhancing cooperation among tax administrations, especially in tackling international tax evasion and avoidance. This publication, which is designed especially for developing countries, aims at providing practical guidance to effectively implement double tax treaties and, in particular, those drawing upon the United Nations Model Double Taxation Convention between Developed and Developing Countries. Primary audiences are officials of national tax authorities and other tax professionals dealing with international taxation matters, the general public, media and universities.

English

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Taxation of investment income and capital gains

This chapter will focus on both the domestic and tax treaty notions of investment income (namely, income from immovable property, dividends, interest and royalties) and capital gains. Attention will also be paid to some specific issues, including hybrid financing and thin capitalization. Furthermore, the administrative procedures for granting tax treaty benefits with respect to the aforesaid different types of income will be discussed. To this end, this chapter will consider the allocation of taxing rights over these items of income and gains under the United Nations Model Double Taxation Convention between Developed and Developing Countries (United Nations Model Convention) and the Organisation for Economic Co-operation and Development Model Tax Convention on Income and on Capital (OECD Model Convention). With respect to the treaty benefits, the main focus will be on the procedures for the granting of these benefits in the source State, but aspects of double taxation relief in the State of residence of the taxpayer will also be briefly dealt with. Only limited attention will be paid to treaty entitlement and anti-abuse issues, as these aspects are extensively covered in other chapters in this Handbook. Finally, some specific aspects of enforcement will be dealt with.

English

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