The 2011 update replaces the 2001 version of the UN Model Double Taxation Convention and Commentary (2001 Version).

The 2011 UN Update makes a number of revisions to the commentary on

· Article 5 (Permanent establishment), to the MC and

· Commentary on Article 26 (Exchange of information) and

· Article 27 (Assistance in collection of taxes).

These changes, to a large extent, reflect and align with the changes made to the OECD MC commentary, since the previous OECD update in 2000.

There is also a change made to

· Article 13 (Capital gains) to expand and include the source-based taxation of capital gains, based on a specified shareholding held ’indirectly’ (in addition to taxation of shares held ‘directly’ that is provided under the 2001 Version) by the alienator at any time during the 12 months preceding the alienation.

The 2011 UN Update also includes the tax treatment of Islamic Financial Instruments in Article 11 (Interest), which is not present in the OECD MC.

In a separate but related development, it has been reported that the Government of India (GOI) has expressed its disagreement to the use of the OECD Transfer Pricing Guidelines (OECD TPG) by the UN. Instead, the GOI proposes that the UN develop a manual on transfer pricing that takes into consideration the concerns of developing countries. According to the GOI, the OECD TPG may not fully reflect these concerns.

Comments from Indian Govt:

H.E. Mr. Manjeev Singh Puri, Deputy Permanent Representative of India, confirmed India’s position that it was extremely important to bring the UN work on international tax matters into the intergovernmental process by upgrading the Committee of Experts to an intergovernmental commission. He was of the view that the OECD Transfer Pricing Guidelines should not have been endorsed by the UN Model and the UN Committee as they had been agreed upon only by the OECD Member States. Instead, an alternative set of guidelines should be developed by a UN intergovernmental body on the basis of consensus amongst all UN Member States.

Letter from India Govt is enclosed for your reference.

United Nations Model Double Taxation Convention between Developed and Developing Countries

Letter from India Govt

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September 2021