What is the OECD's Model Tax Convention?

The OECD’s Model Tax Convention is an international agreement between two countries that establishes rules for the taxation of cross-border income. It is a framework for allocating the right to tax income between two countries, and for the avoidance of double taxation. This model is the result of collaboration between the Organization for Economic Cooperation and Development (OECD) and its member countries, including the United States and the United Kingdom. Under the agreement, the two countries involved determine the types of income that are taxable and how much of the income should be taxed. The agreement also specifies how income is to be shared between the two countries. For instance, if a company earns income in both countries, the agreement determines which country has the right to tax the income. The agreement also sets out which laws should apply in the event of a dispute. In terms of international tax law in Texas, the OECD’s Model Tax Convention is important in that it helps to ensure that foreign income earned by a Texas citizen or business is taxed in accordance with international agreements. It also helps to ensure that Texas citizens and businesses are not double-taxed on foreign or international income. This is a key element of the international tax system in Texas, and one that helps to promote fair and equitable taxation of international income.

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What is the OECD's Model Tax Convention?

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