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OECD Updated Guidance on Tax Treaties

In January, amid the ongoing global challenges posed by the COVID-19 pandemic, the Organization for Economic Cooperation and Development (OECD) made a significant contribution to the international tax landscape by releasing Updated Guidance on Tax Treaties. This timely publication comes against the backdrop of unprecedented disruptions and uncertainties brought about by the pandemic, which have necessitated a reevaluation of existing frameworks and mechanisms governing cross-border taxation. Recognizing the profound impact of COVID-19 on economies worldwide, the OECD Secretariat took proactive measures to address the implications of the pandemic on tax treaties.

Through its issuance of guidance, the Organization for Economic Cooperation and Development seeks to provide clarity and direction to tax authorities, businesses, and taxpayers navigating the complexities of international tax law in the wake of the ongoing crisis. By offering its perspectives and interpretations on the provisions of tax treaties in light of the pandemic, the OECD aims to facilitate informed decision-making and foster cooperation among nations in managing the tax implications of unprecedented global events. As the world continues to grapple with the multifaceted challenges posed by COVID-19, the OECD’s Updated Guidance on Tax Treaties stands as a vital resource, helping stakeholders navigate the evolving landscape of international taxation with greater confidence and certainty.

It is important to remember that the guidance represents the view of the Secretariat on the interpretation of the provisions of tax treaties. This means that each jurisdiction may adopt its own guidance to provide tax certainty to taxpayers.

The guidance addresses the following:

  • Concerns regarding permanent establishment.
  • Concerns related to change of residence for entities and individuals including the application of the tie-breaker rules to dual residents where individuals were restricted from travel. Also, the potential change in the “place of effective management” of a company as a result of a relocation, or inability to travel, of board members or other senior executives.
  • Concerns related to income from employment including stimulus packages, telecommuting, and other changes to employment during this unprecedented time.

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This document contains general information only and is not a substitute for accounting, tax, or any other professional advice or services. The information provided is considered accurate at the time of publishing and will not be updated with new regulation requirements.

Comply Connect May 2024 – Issue 11

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