OECD updates guidance on COVID-19 pandemic and tax treaties

The update revisits the guidance issued by the OECD Secretariat on the impact of the COVID-19 pandemic on tax treaties in April last year.

The OECD has published an update to its guidance on the impact of the COVID-19 pandemic on tax treaties.

The update – published on January 21, 2021 – revisits the guidance issued by the OECD Secretariat on the impact of the COVID-19 pandemic on tax treaties in April last year.

The guidance represents the Secretariat’s views, supported by Working Party 1 (in its Inclusive Framework setting), on the interpretation of the provisions of tax treaties intending to provide more certainty to taxpayers during this exceptional period when those measures were applicable.

The guidance reflects the general approach of Working Party 1 and illustrates how some jurisdictions have addressed the impact of COVID-19 on the tax situations of individuals and employers.

The updated guidance outlines the application of the existing rules and the OECD Commentary on concerns related to the creation of permanent establishments; the application of “tie-breaker” rules to dual residents; and the tax treaty treatment of income from employment.

The updated guidance can be viewed on the OECD website.