handbook-tb

Brian J. ArnoldIt also contains a discussion of the possible constraints on the taxationof income from services imposed by the provisions of the GeneralAgreement on Trade in Services 6 (GATS) and Article 24 of the UnitedNations Model Convention on Non-discrimination. The chapter endswith a brief conclusion.2. Domestic law with respect to the taxation of incomefrom services2.1 IntroductionIt is not surprising that the treatment of income from services underthe domestic laws of developing countries varies considerably. 7 Thefollowing discussion is not intended to comprehensively identify allof the different rules in the various developing countries. Instead, it isintended to describe the most common patterns for the domestic taxationof services and the major factors affecting such taxation.At the outset, it should be noted that this chapter is primarilyconcerned with the treatment of income from services derived bynon-residents of developing countries. Income derived by residents ofdeveloping countries from services performed outside their country ofresidence or services performed for non-residents (that is to say, foreignsource income) is dealt with only briefly here because such servicesdo not provide opportunities for base erosion and profit shiftingfor most developing countries as serious as those provided by inboundservices. 8 For countries that tax on a territorial basis, income derivedfrom services performed outside the country is not taxable. Therefore,6General Agreement on Trade in Services, 15 April 1994, MarrakeshAgreement Establishing the World Trade Organization, Annex 1B, availableat http://www.wto.org/english/docs_e/legal_e/26-gats.pdf.7See, generally, Ariane Pickering, “General Report,” in InternationalFiscal Association, “Enterprise Services,” in Cahiers de droit fiscal international(The Hague, The Netherlands: Sdu Uitgevers, 2012), Vol. 97a, 17 – 60,at 23 – 35.8It is notable that the OECD Action Plan on BEPS did not identify theperformance of services as an area of concern.50