United Nations Model Double Taxation Convention between Developed and Developing Countries.

Abstract

The United Nations Model Double Taxation Convention Between Developed and Developing Countries (2021) serves as a framework for bilateral tax treaties aimed at eliminating double taxation and preventing tax evasion. It is specifically designed to reflect the interests and needs of developing countries, offering a more balanced allocation of taxing rights between source and residence jurisdictions than other models, such as the OECD Model. The Convention includes provisions on the taxation of various types of income—such as business profits, dividends, interest, royalties, and capital gains—while ensuring that income is not taxed twice. It introduces broader definitions of permanent establishment, allowing source countries greater rights to tax foreign enterprises operating within their borders. It also provides mechanisms for mutual agreement procedures, exchange of information, and assistance in tax collection, promoting international cooperation and transparency. The 2021 version incorporates updates to address base erosion and profit shifting (BEPS), digital economy challenges, and anti-abuse measures, making it a modern tool for treaty negotiation that supports sustainable development goals.