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COMMENTARY ON Articles 30 AND 31

CONCERNING THE ENTRY INTO FORCE AND THE TERMINATION OF THE CONVENTION

1. The present provisions on the procedure for entry into force, ratification and termination are drafted for bilateral conventions and correspond to the rules usually contained in international treaties.(Renumbered on 28 January 2003 see History)

2. Some Contracting States may need an additional provision in the first paragraph of Article 30 indicating the authorities which have to give their consent to the ratification. Other Contracting States may agree that the Article should indicate that the entry into force takes place after an exchange of notes confirming that each State has completed the procedures required for such entry into force.(Renumbered and amended on 28 January 2003 see History)

3. It is open to Contracting States to agree that the Convention shall enter into force when a specified period has elapsed after the exchange of the instruments of ratification or after the confirmation that each State has completed the procedures required for such entry into force.(Renumbered on 28 January 2003 see History)

4. No provisions have been drafted as to the date on which the Convention shall have effect or cease to have effect, since such provisions would largely depend on the domestic laws of the Contracting States concerned. Some of the States assess tax on the income received during the current year, others on the income received during the previous year, others again have a fiscal year which differs from the calendar year. Furthermore, some conventions provide, as regards taxes levied by deduction at the source, a date for the application or termination which differs from the date applying to taxes levied by assessment.(Renumbered on 28 January 2003 see History)

5. As it is of advantage that the Convention should remain in force at least for a certain period, the Article on termination provides that notice of termination can only be given after a certain year, to be fixed by bilateral agreement. It is open to the Contracting States to decide upon the earliest year during which such notice can be given or even to agree not to fix any such year, if they so desire.(Renumbered on 28 January 2003 see History)

Articles 30 and 31 correspond to Article 29 and 30 as they read before 28 January 2003. These Articles were renumbered 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 Articles 29 and 30 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 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. The present provisions on the procedure for entry into force, ratification, denunciation and termination are drafted for bilateral Conventions and correspond to the rules usually contained in international treaties.”

Paragraph 2Corresponds to paragraph 2 of the Commentary on Articles 29 and 30 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, and was amended by replacing a reference to article 29, by the report entitled “The 2002 Update to the Model Tax Convention” adopted by the OECD Council on 28 January 2003. In the 1977 Model Convention and until 28 January 2003, paragraph 2 read as follows:“2. Some Contracting States may need an additional provision in the first paragraph of Article 29 indicating the authorities which have to give their consent to the ratification. Other Contracting States may agree that the Article should indicate that the entry into force takes place after an exchange of notes confirming that each State has completed the procedures required for such entry into force.”

Paragraph 2 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 2 read as follows:“2. In the case of some Contracting States, constitutional requirements may necessitate an additional provision in the first paragraph of the Article on entry into force indicating the authorities which have to give their consent to the ratification.”

Paragraph 3Corresponds to paragraph 3 of the Commentary on Articles 29 and 30 of the 1977 Model as it read before 28 January 2003. On that date paragraph 3 of the Commentary on Articles 29 and 30 was renumbered as 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 3 of the 1963 Draft Convention was replaced when the 1977 Model Convention was adopted by the OECD Council on 11 April 1977. At that time, paragraph 3 of the 1963 Draft Convention was amended and renumbered as paragraph 4 (see history of paragraph 4) and a new paragraph 3 was added.

Paragraph 4Corresponds to paragraph 4 of the Commentary on Articles 29 and 30 of the 1977 Model as it read before 28 January 2003. On that date paragraph 4 of the Commentary on Articles 29 and 30 was renumbered as 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 4 of the 1977 Model Convention corresponded to paragraph 3 of the 1963 Draft Convention. Paragraph 4 of the 1963 Draft Convention was amended and renumbered as paragraph 5 (see history of paragraph 5) when the 1977 Model Convention was adopted by the OECD Council on 11 April 1977. At the same time, paragraph 3 of the 1963 Draft Convention was amended and renumbered as paragraph 4 of the 1977 Model Convention. In the 1963 Draft Convention (adopted by the OECD Council on 30 July 1963) and until the adoption of the 1977 Model Convention, paragraph 3 read as follows:“3. No provisions have been drafted as to the date on which the Convention shall have effect or cease to have effect, since such provisions would largely depend on the national laws of the Contracting States concerned, Some of the States assess tax on the income received during the current year, others on the income received during the previous year, others again have a fiscal year which differs from the calendar year. Furthermore, some Conventions provide, as regards taxes levied by deduction at the source, a date for the application or termination of the Convention which differs from the date applying to taxes levied by assessment.”

Paragraph 5Corresponds to paragraph 5 of the Commentary on Articles 29 and 30 of the 1977 Model as it read before 28 January 2003. On that date paragraph 5 of the Commentary on Articles 29 and 30 was renumbered as 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.

Paragraph 5 of the 1977 Model Convention corresponded to paragraph 4 of the 1963 Draft Convention. Paragraph 4 of the 1963 Draft Convention was amended and renumbered 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 4 read as follows:“4. As it is of advantage that the Convention should remain in force at least for a certain period, the Article on denunciation provides that notice of termination can only be given after a certain year — to be fixed by bilateral agreement. It is open to the Contracting States to decide upon the earliest year during which such notice can be given or even to agree not to fix any such year, if they so desire.”