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COMMENTARY ON Article 29

CONCERNING THE TERRITORIAL EXTENSION OF THE CONVENTION

1. Certain double taxation conventions state to what territories they apply. Some of them also provide that their provisions may be extended to other territories and define when and how this may be done. A clause of this kind is of particular value to States which have territories overseas or are responsible for the international relations of other States or territories, especially as it recognises that the extension may be effected by an exchange of diplomatic notes. It is also of value when the provisions of the Convention are to be extended to a part of the territory of a Contracting State which was, by special provision, excluded from the application of the Convention. The Article, which provides that the extension may also be effected in any other manner in accordance with the constitutional procedure of the States, is drafted in a form acceptable from the constitutional point of view of all OECD member countries affected by the provision in question. The only prior condition for the extension of a convention to any States or territories is that they must impose taxes substantially similar in character to those to which the convention applies.(Renumbered on 28 January 2003 see History)

2. The Article provides that the Convention may be extended either in its entirety or with any necessary modifications, that the extension takes effect from such date and subject to such conditions as may be agreed between the Contracting States and, finally, that the termination of the Convention automatically terminates its application to any States or territories to which it has been extended, unless otherwise agreed by the Contracting States.(Renumbered on 28 January 2003 see History)

3. (Renumbered on 28 January 2003 see History)

4. (Renumbered on 28 January 2003 see History)

5. (Renumbered on 28 January 2003 see History)

Article 29 replaced a previous Article 29 on 28 January 2003 and corresponds to Article 28 as it read before that date. The previous Article 29 (Entry into Force) was renumbered Article 30 (see history of the Commentary on Article 30) and Article 28 was renumbered Article 29 as a consequence of the addition of a new Article 27 (Assistance in the Collection of Taxes) by the report entitled “The 2002 Update to the Model Tax Convention”, adopted by the OECD Council on 28 January 2003. The addition of the new Article 27 required the renumbering of Articles 28, 29 and 30 as Articles 29, 30 and 31 (see history of the Commentary on these Articles).

Paragraph 1Corresponds to paragraph 1 of the Commentary on Article 28 of the 1977 Model as it read before 28 January 2003. On that date paragraph 1 of the Commentary on Articles 29 and 30 was renumbered as paragraph 1 of the Commentary on Articles 30 and 31 (see history of paragraph 1 of the Commentary on Articles 30 and 31) and paragraph 1 of the Commentary on Article 28 was renumbered as paragraph 1 of the Commentary on Article 29 by the report entitled “The 2002 Update to the Model Tax Convention” adopted by the OECD Council on 28 January 2003.

Paragraph 1 was amended when the 1977 Model Convention was adopted by the OECD Council on 11 April 1977. In the 1963 Draft Convention (adopted by the OECD Council on 30 July 1963) and until the adoption of the 1977 Model Convention, paragraph 1 read as follows:“1. Certain double taxation Conventions state to what territories they apply. Some of them also provide that their provisions may be extended to other territories, and define when and how this may be done. A clause of this kind is of particular value to States which have territories overseas or are responsible for the international relations of other States or territories, especially as it recognises that the extension may be effected by an exchange of diplomatic notes. It is also of value when the provisions of the Convention are to be extended to a part of the territory of a Contracting State which was, by special provision, excluded from the application of the Convention. The Article, which provides that the extension may also be effected in any other manner in accordance with the constitutional procedure of the States, is drafted in a form acceptable from the constitutional point of view of all Member countries affected by the provision in question. The only prior condition for the extension of a Convention to any States or territories is that they must impose taxes substantially similar in character to those to which the Convention applies.”

Paragraph 2Corresponds to paragraph 2 of the Commentary on Article 28 of the 1977 Model as it read before 28 January 2003. On that date paragraph 2 of the Commentary on Articles 29 and 30 was renumbered as paragraph 2 of the Commentary on Articles 30 and 31 (see history of paragraph 2 of the Commentary on Articles 30 and 31) and paragraph 2 of the Commentary on Article 28 was renumbered as paragraph 2 of the Commentary on Article 29 by the report entitled “The 2002 Update to the Model Tax Convention” adopted by the OECD Council on 28 January 2003.

Paragraph 2 was added when the 1977 Model Convention was adopted by the OECD Council on 11 April 1977.

Paragraph 3Renumbered as paragraph 3 of the Commentary on Articles 30 and 31 (see history of paragraph 3 of the Commentary on Articles 30 and 31) by the report entitled “The 2002 Update to the Model Tax Convention” adopted by the OECD Council on 28 January 2003.

Paragraph 4Renumbered as paragraph 4 of the Commentary on Articles 30 and 31 (see history of paragraph 4 of the Commentary on Articles 30 and 31) by the report entitled “The 2002 Update to the Model Tax Convention” adopted by the OECD Council on 28 January 2003.

Paragraph 5Renumbered as paragraph 5 of the Commentary on Articles 30 and 31 (see history of paragraph 5 of the Commentary on Articles 30 and 31) by the report entitled “The 2002 Update to the Model Tax Convention” adopted by the OECD Council on 28 January 2003.