As digital economies evolve, both models are undergoing major shifts to address "tax-less" digital profits and remote work:
The and the UN Model Double Taxation Convention serve as the primary blueprints for the global network of over 3,000 bilateral tax treaties. While both aim to eliminate double taxation, they represent fundamentally different economic priorities: the OECD model favors residence-based taxation (benefiting capital-exporting developed nations), while the UN model emphasizes source-based taxation (protecting the revenue rights of capital-importing developing nations). 1. Key Divergences in Taxing Rights The Impact of the OECD and UN Model Conventions...
: Allows for higher withholding rates , ensuring the country where the income is generated retains more revenue. Business Profits & Technical Fees : As digital economies evolve, both models are undergoing
: Often prevents separate taxation of technical service fees unless linked to a PE. Key Divergences in Taxing Rights : Allows for
: Provides a broader definition, including a 6-month threshold for construction and a "service PE" clause allowing taxation of services even without a fixed office. Passive Income (Dividends, Interest, Royalties) :
: Generally pushes for lower withholding tax rates (typically 5–15%) to encourage investment.