3.2.1 Drafting of the OECD MTC

The foundations for today's model tax conventions and tax treaty networks of states were laid at the beginning of the 20th century.1 Shortly after the First World War, the League of Nations was founded. The League of Nations aimed at promoting international cooperation and establishing international peace and security. The Financial Committee was set up specifically for the international aspects of taxation. In 1943, they published the first model tax convention, the Mexico Model Tax Convention. In 1946, the London Model Tax Convention was published.2

The OECD MTC was drafted after the Second World War. At the time, there was increasing economic interdependence and cooperation among members of the Organisation for European Economic Co-operation (OEEC), the forerunner of the OECD. In May 1956, the OEEC Fiscal Committee held its first meeting. The Fiscal Committee was established to consider issues of double taxation and other related tax issues.3 Two different countries taxing the same income created obstacles to international trade and investment, and it was considered important for countries to remove these obstacles. The OEEC Fiscal Committee was given the task to come up with concrete proposals for the elimination of double taxation in the areas of direct and indirect taxation,4 and to solve inequalities in taxation based on nationality. In 1963, the OECD published its first model tax convention, which facilitated the conclusion of bilateral tax treaties to the benefit of both taxpayers and tax authorities.5

The OECD MTC and its Commentary are updated regularly. The last update was published in 2017 and incorporated the changes resulting from the October 2015 BEPS reports.