oR TON “FOR TUROP. Paris, Jlst fugust, 1960 PEAIPLA( EO) Seale 6. or. Engi. powers PARTY: No. 14 OF THE FISCAL comern ; (austria: ~ Sweden). HIRD REPORT ON THE DRAFT ARTICLE ON THE MUTUAL AGREEMENT. PROCEDURE “(Received | ‘on: 3ist August, 1960) - At its 19th Session, the Fiscal Committee discussed E e Artiche B-on the Mutual“Agreement Procedure as drafted in “document: FC/PL4(60)3... In drafting the following ‘new version’ of the Article the’ Working Party :has taken into ‘consideration the’ dee signs of the: Comnittes: ana as‘far as possible'the different op: nions expressed’ by’ tho’ delegations. : 9. ‘05FO/UPLA(GO)4 ,_ ASNEENENT PROCEDURE, AMPECLE E ) here a resident of a Contracting State considers that 2 actions of one or both of the Contracting States result or 11 result for hin in taxation vieh is not in accordance w. he provisions of this Convention, he may, notwithstanding the isernal legal remedies, present his case to the competent autho- ity of that Contracting State of which he is a resident. 2) If the objection is deemed to be justified the competent utnority of the State concerned, shall if it is not preparec 0 change its own taxation measures, endeavour to come to an greement with the competent authority of the other Contracting tate, with a view to the avoidance of taxation which is not in geordance with the provisions of this Convention. nh @) The competent authorities of the Contracting States shall endgavour to resolve by mutual agreement any difficulties or doubts ari: 'ng as to the interpretation or application of this Convention, They may also consult together for the elimination of double taxation in cases not provided for in this Convention. (i). ‘The compétent authorities of the Contracting States shall coummicate with each other directly for the purpose of reaching an agreetient. in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oval exehatige of opinions, such exchange may take place through a join’ commission consisting of representatives of the competent authorities of the Contracting States.“thé competen: 2 resident. only, ah exchenge: views as well'as of information with the competent authorit: the other Contracting: State may. be useful, e.g. to-obtain pport for a cortain {nterpretation of’, the, Conv oe +) Ti paragre, ls 1a1a down thet Gn hie, State: residence: would not be prepared to exchange its own taxation: ieacures, the o avding the introduetion of this ‘procedure. ‘be tioned the ‘case, here’ one, Contracting ©PO/PLa(GO)¥ -he State which in the porticular case has no right to tex under the Convention, ‘taxes-incone not being subject to tax-under. the lavs of the Contracting State. Another exaniple is the case of the application-of non-diserimination olauses. No time-limit ‘1s laid doin in the Artiélé for presenting ims “under, paragraph’ (1). It may bes of. course, that’ some tes’ Would find it desirable ‘to apply ‘a’ time-limit as between ingelvess: “Ifa clause on such a time-Limit is to be agreed mn bilateratly, it should’contain.a clear definition’ oF minus 'a quo.’ Depending upon which ‘starting point’ 18 ‘chosen, ime-limit may be of a short or a ‘long duration and it might be construed as a final dead-line or just as being indicative. Paragraph S$... “The" provisions of paragraph (3)‘invité the ‘competent autho- rities to ‘resolve genéral difficulties of interpretation or A application by means of special agreements and enable the autho- rities ‘to ‘enterinto such agreements, if possible. It is ‘evident that, ‘due to constitutional obstacles, somé States may-not be in A position to conclude general agreements of interpretation by using this ' procedtive. fs 7 ads . Inthe second Sentence of paragraph (3) a possibility is in cated for the competent’ authorities to deal also with such cases double taxation which do not come within the “scope of ‘the other ‘ovisions of the, Convention. Of special interest in this connec- on is the case ‘of a resident of a third’ State having permanent tablishment in both Contracting States, It 1s, of course, sirable that the consultations concerned should result in agree- nts onthe effective elimination of the double"taxation in estion, Also as regards the use of this provision difficulties ‘y arise for’ some States from constitutional reasons. Paragraph’ (ii This paragraph provides that the competent authorities of le. Contracting States shall communicate with. each other directly. would thus not be necessary to go through diplomatic channels. As suggested by the Second sentéhee of paregraph (4) the ming of a Joint commission may in certain cases be advisable. pocial commission ‘consisting also’ of representatives of ‘other tc than the States involved might be useful where several ateral convelifieus contain identicdl provisions or in case a multilateral eonvention. Such a special commission could be a consultative or mendatory nature.