handbook-tb

Diane Ring5.2 Article 26 of the Model ConventionsBoth the United Nations Model Convention and the OECD ModelConvention include an Article 26 (Exchange of information) that outlinesthe primary terms governing exchange of information betweenthe two signatories: the duty to exchange, the duty to protect taxpayerinformation, the grounds upon which a request for information canbe declined and the grounds which do not form an appropriate basisfor refusal to exchange information. The United Nations and OECDversions of Article 26 (and their respective Commentaries) differ insome regards and on balance share several common deficits, but theircommon features are reflected in the bilateral tax treaties of manycountries. Moreover, as referenced below, changes have been made toArticle 26 of both Conventions in an effort to increase the likelihoodof meaningful exchange of information.5.2.1 Standard governing requestsAs noted earlier, Article 26 of neither the United Nations nor the OECDModel Convention requires automatic exchange of information. Thus,countries requesting information must meet certain thresholds fordocumenting their request (in other words, “no fishing expeditions”).This step limits jurisdictions to requesting information only abouttaxpayers and activities for which they already have some knowledge.Moreover, the specific threshold requirements imposed by existingbilateral tax treaties decrease the likelihood that information will berequested. Recent changes to Article 26 of the United Nations ModelConvention decreased the impact of these “thresholds.” For example,changes to Article 26 (1) in 2011 sought to extend the scope of exchangeof information by providing that information should be exchanged if it is“foreseeably relevant for carrying out the provisions of [the] Conventionor to the administration or enforcement of the domestic laws of theContracting States.” The phrase “foreseeably relevant” replaced the earlierterm “necessary.” 62 The Commentary on Article 26 of the UnitedNations Model Convention offers some alternative language for the new62Paragraph 4 of the Commentary on Article 26 of the United NationsModel Convention characterized the change to “foreseeably relevant” as onethat was not substantive. Rather, it was intended to “remove doubts” and“clarify” the prior language.556