Taxation of Computer Software: Need for Clear Guidance in the UN Model Tax Convention

20.500.12592/xj7w3v

Taxation of Computer Software: Need for Clear Guidance in the UN Model Tax Convention

25 Mar 2023

Royalties: A Transfer Of Resources From does not provide statistics on payments and receipts for the South to the North the use of IP through its Trade Policy Review (TPR).3 The report of the Commission on Intellectual Property In addition to the direct monetary cost, there is also Rights (IPRs) in 2002 called for an IP system that consid- the potential loss of tax revenue. [...] tional law is that computer software is considered “literary work”, and so payments for the use or the The OECD, as the organization representing the inter- right to use any copyright of literary work also cover ests of the developed countries where the software com- computer software. [...] In the view of a large minority of the Members of come in accordance with Article 7, they would be taxed the Committee, Article 12 should allow for source State as “business profits”, which would require a physical taxing rights even in cases where the user of computer presence through a permanent establishment in the software is not exploiting the copyright in the software. [...] son use that computer software, without having the The “guidance” in the OECD Commentary was in- owner establish any presence in the state where it is troduced with the implication of saving the Global used, or where the user resides, which would satisfy North’s software corporations from paying taxes to the the requirements of Article 5 for the existence of a per- Global South. [...] consideration for the letting of that intangible property Given the dominance of developed countries in the just as a person that is making payments for the use of OECD, it is not surprising that the latest set of rules on industrial, commercial or scientific equipment (already taxation of the digitalized economy, known as the ‘Two included in paragraph 3) is making a payment in con- Pillar Soluti.

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Switzerland
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TAX COOPERATION POLICY B RIEF - Taxation of Computer Software: Need for Clear [from PDF fonts]

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