Payments for Software under the UN Model Convention

We have submitted comments to the UN Tax Committee’s consultation on a discussion draft to revise the Royalties article to clarify its application to software. Unfortunately, in our view the draft is seriously defective, since it is based on and would perpetuate a confused and misleading understanding of copyright introduced in 1992 in the OECD Commentary. This interpretation was rejected by many states, many of which have chosen to clarify their actual treaties by including a specific mention of computer programs as examples of copyright work. This draft proposes a different approach which could have retroactive effects on these treaties and deprive many states of taxing rights. We urge the Committee to adopt instead a simple clarification of the model based on these existing treaties. To contribute to a rapid conclusion of this work we provide a draft for five paragraphs of Commentary to accomplish this task.