Praxis des Internationalen Steuerrechts

S. 671

Mike Waters

S. 673Having worked alongside Dr Loukota at the OECD’s Working Party No. 1 on the Model Tax Convention for many years, I know the importance that he attaches to the use of the Commentaries when interpreting tax treaties that are based on it. I am therefore pleased to have this opportunity to set out my own views on the subject.

I. The search for consistency

Why should there be a need for an aid to the interpretation of bilateral tax treaties in the first place? Tax authorities and taxpayers alike would like to think that there exists the “one true meaning” that would help to ensure consistency of interpretation and application of identical provisions in treaties between States A and B, A and C, B and C, C and D etc Such consistency would lead, in the case of the treaty between States A and B for example, to equality of treatment for residents of State A deriving income from State B compared with residents of State B deriving income from State A. Treaty provisions are generally phrased reciprocally, reflecting the intentions of the parties that they should be applied in the same way and to the same extent in each State. These shared intentions and expectations of the parties unde...