"Irrelevant or Even Worse? The Vicious Dilemma of the New Tax Treaty Preamble"

... under this title, Professor Andrés Báez Moreno has published a critical article on the OECD Model Tax Convention and its further development in the Canadian Tax Journal.

The OECD Model Tax Convention (OECD-MA 2017) serves as a template for member states to use when drafting their intergovernmental tax agreements with the aim of avoiding double taxation, profit reduction and profit shifting, and non-taxation of income in double taxation agreements. Until now, no text was specified for the preamble of the model agreement. It was simply to be in accordance with the constitutional provisions of the two Contracting States. This is now set to change as part of Action 6 of the OECD Action Plan (BEPS).

Andrés Baez Moreno has put forward what he himself describes as a simple and provocative thesis on this issue and published his article in the Canadian Tax Journal under the title “Irrelevant or Even Worse? The Vicious Dilemma of the New Tax Treaty Preamble.” “The new preamble to the OECD Model Tax Convention is either irrelevant because it adds nothing new, or worse, because it requires a reassessment of many generally accepted rules and principles underlying the interpretation and application of tax treaties,” says Professor Baez Moreno.

He makes two demands in this regard:

1. The preamble should not have any independent effect, as this could significantly undermine the integrity of the rule interpretation process.

2. The preamble should not serve as a supplementary rule to the new provision on abuse of DTAs (“principal purpose test”), as this would further exacerbate the already excessive impact of this general anti-abuse provision and, in any case, further jeopardize its interpretation.

The full article in the Canadian Tax Journal is available at the following link: https://doi.org/10.32721/ctj.2025.73.1.baezmoreno

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Published:   Canadian Tax Journal, 2025, Volume 73, Nr. 1, p. 1 - 39.