handbook-tb

Preventing tax treaty abuseboth States agree with the adjustment. Where one State was unwillingto adjust the existing text and was unwilling to accept changes basedon these recommendations, a State might decide that it should simplyunilaterally override or even terminate a treaty with the treaty partner,though either would be an extremely drastic action.In the longer term, it may be that the proposed multilateralinstrument being considered in Action 15 of the OECD Action Plan onBEPS offers the best hope for simple and clear procedures for updatingexisting bilateral treaties to accommodate subsequent developmentsin treaty practice. Action 15 proposes exploring “a multilateral instrument”so that jurisdictions could “implement measures developed inthe course of the work on BEPS and amend bilateral tax treaties.”There will also be changes to the Commentary to the OECDModel Convention as a result of the OECD project on BEPS, which againmay flow through to changes to the Commentary to the United NationsModel Convention. Here, there may be more flexibility regarding theimpact of these changes on the interpretation of existing treaties. TheOECD maintains the position that changes to the Commentary canhave retrospective effect — that is to say, additions or revisions to theCommentary should be understood to apply to the interpretation ofexisting treaties:[O]ther changes or additions to the Commentaries are normallyapplicable to the interpretation and application of conventionsconcluded before their adoption, because they reflect the consensusof the OECD member countries as to the proper interpretationof existing provisions and their application to specificsituations. 34This position may be somewhat ambitious. Some domesticcourts have taken the view that, as commentaries form part of thebackground against which a treaty was negotiated, subsequent changesto the Commentary cannot assist the Court to uncover the intention ofthe contracting States at the time they negotiated their treaty.34See paragraph 35 of the Introduction to the OECD Model Convention.317