According to a statement made by Treasury Deputy Assistant Secretary for International Tax Affairs Robert B. Stack:
The draft provisions … reflect the fact that the tax regimes of our treaty partners are more likely to change over time than they have in the past, and that they sometimes change in ways that encourage base erosion and profit shifting or BEPS, by multinational firms. Treaties exist to eliminate double taxation, not to create opportunities for BEPS, and today’s updates fully take account of the new international tax environment. The draft provisions also articulate steps that would help prevent our treaty network from encouraging inversion transactions….
As noted in a Treasury release:
Treasury has invited comments on these proposed treaty rules.
While not among the draft treaty provisions released today, Treasury stated that it intends to include in the next U.S. Model Tax Convention a new article to resolve disputes between tax authorities through mandatory binding arbitration.
The U.S. Model Tax Convention was last updated in 2006.
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