The international character of international shipping complicates the allocation of taxable income between states in which the operation of ships takes place, which increases the risk of double taxation. Organisation for Economic Co-operation (“OECD”) recognises the harmful effects of double taxation on the exchange of goods and services, and seeks with the OECD Model Tax Convention on Income and Capital (“OECD Model Tax Convention”) to provide means of settling the problems that arise in the field of international juridical double taxation on a uniform basis. Article 8, par. 1, of the OECD Model Tax Convention allocates the taxing rights to profits from the operation of ships in international traffic, which is the focus of this thesis. The juridical section examines the scope of application of Article 8, par. 1, and the legal value of the changes to Article 8, par. 1, in 2017. The broad scope of Article 8, par. 1, aims to simplify the interpretation of the profits included. However, the thesis has identified problems in relation to the interpretation concerning one of the concepts used in Article 8, par. 1. As the update to Article 8, par. 1, in 2017 reflects current treaty practices of the majority of OECD and non-OECD countries, the update is considered a clarification, which can be included in the interpretation of existing double tax treaties. However, in a few particular cases, the update cannot be considered a clarification but instead a change in content, which should not be included in the interpretation of existing double tax treaties. The economic section concludes that the use of Article 8, par. 1, to allocate taxing rights to profits from the operation of ships in international traffic is Kaldor-Hicks efficient, even though the application of Article 8, par. 1, entails transaction costs. The conclusions from the juridical and economic analysis are combined in an integrated chapter, which sets out a policy suggestion with an aim to lower the transaction costs associated with the use of Article 8, par. 1, of the OECD Model Tax Convention.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||99|