Seeking Inputs on Discussion Paper released by UN Tax Committee
Blog: NASSCOM Official Blog
The United Nations (UN) Tax Committee has released a discussion paper on a proposal for inclusion of ‘software payments’ in the definition of Royalty under Article 12 of UN Model Double Taxation Convention.
Accordingly, definition of the term “royalties” in paragraph 3 of Article 12 of UN Model would be amended as follows (the proposed addition appears in bold italics):
The term “royalties” as used in this Article means “payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, computer software or for the use of, or the right to use, industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.”
We understand that India has already included software payments under definition of Royalty in its domestic tax laws. Therefore, this proposal may not have a notable impact on software transactions but, could help align the definition in domestic tax laws and tax treaties, thereby, bringing in a level of certainty and reducing the scope for tax disputes overall.
In this regard, we request you to kindly share your inputs on the feasibility of such an addition in the definition of royalty and its likely impact. We request you to kindly share your inputs before September 22, 2020 with firstname.lastname@example.org and email@example.com.
We look forward to your response