handbook-tb

Brian J. Arnoldtechnical knowledge, skill, know-how or processes, or that involve thedevelopment of a technical plan or design.The distinction between technical services and professional andbusiness services that involve technical expertise is unclear. For example,engineering services would often be considered technical services;however, the independent activities of engineers are included in thedefinition of “professional services” for purposes of Article 14 of theUnited Nations Model Convention. 77 Thus, income from engineeringservices, at least those performed by individuals, would be taxable bya source country only if the engineer has a fixed base in that countryor stays in that country for 183 days or more in any 12-month period.4.11.3 The taxation of income from technical services under theprovisions of the United Nations Model Convention andbilateral tax treatiesEven if the provisions of a developing country’s domestic law imposetax on income from technical services earned by a non-resident, theprovisions of an applicable tax treaty may limit that tax. This sectionprovides a brief review of the provisions of the United Nations ModelConvention potentially applicable to income from technical servicesand an overview of the provisions dealing with income from technicalservices that some developing countries have included in some of theirtax treaties.The current United Nations Model Convention does not containany specific provisions dealing with income from technical servicesprovided by a resident of one State in the other contracting State orto customers in the other contracting State. In general, income frombusiness services is covered by Article 7 or 14. Under Article 7 (1), acountry is entitled to tax a non-resident’s business profits only if thenon-resident carries on business in the country through a PE. A PEis defined in Article 5 to be a fixed place of business which lasts for aminimum period (generally, six months) and under Article 5 (3) (b) anon-resident is deemed to have a PE in the source country if it furnishesservices in the source country for more than 183 days in any 12-month77See Article 14 (2) of the United Nations Model Convention.92