handbook-tb

Taxation of income from servicesthe non-discrimination article in their tax treaties. In general, neitherthe GATS nor non-discrimination articles based on Article 24 of theUnited Nations Model Convention impose serious constraints on thetaxation of income from services derived by non-residents. The followingdiscussion provides an overview of the provisions of the GATSand Article 24 of the United Nations Model Convention potentiallyapplicable to income from services.5.2 The General Agreement on Trade in ServicesFor countries that are members of the World Trade Organization(WTO), any measures of domestic law must comply with the provisionsof the General Agreement on Trade in Services (GATS). 84 Forpurposes of the GATS, the term “services” is not defined except toinclude “any service in any sector” and to exclude services performedby governments. 85 However, “services” would appear to have a broadmeaning for purposes of the GATS as illustrated by the “ServicesSectoral Classification List” used during the negotiation of the GATS. 86In general, the GATS applies to measures by member countries “affectingtrade in services” 87 and “trade in services” is defined to mean thesupply of a service in any of the following four modes:‣ ¾ From the territory of one member country into another;‣ ¾ In the territory of a member country to a consumer of anymember country;‣ ¾ By a service supplier of one member country through commercialpresence in another member country;84See, in general, Catherine Brown, “Tax Discrimination and Trade inServices: Should the Non-discrimination Article in the OECD Model TreatyProvide the Missing Link between Tax and Trade Agreements?” in ArthurJ. Cockfield, ed., Globalization and Its Discontents: Tax Policy and InternationalInvestment, (Toronto: University of Toronto Press, 2010), at 257 – 79.85See Article I (3) (b) of the GATS.86See World Trade Organization, “Services Sectoral Classification List,”10 July 1991, MTN.GNS/W/120, available at http://www.wto.org/english/tratop_e/serv_e/serv_sectors_e.htm.87See Article I (1) of the GATS.97