UN Tax Committee proposal on tax action of digital services
The UN Tax Committee has proposed a revision of the Model Treaty to address the taxing rights over income arising from digital services. The proposal seeks to grant taxing rights to the state of the resident payer (the market jurisdictions). The committee proposes a new article to specifically address the taxing rights over digital services through bilateral tax treaties.
The proposal comes amidst the ongoing discussions of the OECD-led Inclusive Framework which has so far put on the table various proposals on how taxation on the digitalisation of the economy ought to be implemented in a way that protects the tax bases of both the source jurisdictions and the market jurisdictions.