How do the OECD's model tax conventions affect international taxation?

The Organisation for Economic Co-operation and Development (OECD) model tax conventions are important for international taxation. These model tax conventions set out rules and guidance for how countries should handle taxation of income, capital, and inheritance from foreign sources. The most significant effects of the OECD model tax conventions are that they help countries avoid double taxation of income, capital, and inheritance when it is earned, received, or inherited from foreign sources. Double taxation occurs when the same income, capital, or inheritance is taxed by two different countries. The model tax conventions ensure that there is only one country that taxes a particular income or capital. The conventions also prevent "treaty shopping," which is when a person or company tries to take advantage of differences in tax laws between two countries in order to reduce their tax burden. The conventions make it so that even if a person or company is based in one country, it cannot take advantage of the lower tax rate of another country by claiming the lower rate unless the income or capital actually originates from the other country. Finally, the model tax conventions help provide certainty and fairness in the taxation system. They provide countries with the ability to predict and plan for their revenue flows and provide rules for how taxpayers should be treated. This makes it easier for countries to manage their tax systems, providing certainty and fairness for both the government and taxpayers.

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How do the OECD's model tax conventions affect international taxation?

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