The Tax Programme of the OECD Korea Policy Centre(KPC), in collaboration with the OECD, the Asian Development Bank (ADB), and the United Nations Department of Economic and Social Affairs (UNDESA), organized a workshop on “Negotiations of Tax Treaties” from 27(Monday) to 31(Friday) May 2024 at the President Hotel in Seoul. The workshop was attended by 32 tax officials from non-OECD countries in the Asia-Pacific region and 8 speakers from the OECD, ADB and UNDESA. The speakers included Néstor Venegas (OECD), Edward Barret (OECD), Sara Shearmur (OECD), Juan Carlos Trujillo Barroso (Mexico), Ronita Ram (Australia), Patricia Brown (UNDESA), Irving Ojeda (UNDESA), and Sathi Meyer-Nandi (ADB). 

The workshop aimed to disseminate the provisions of tax treaties and the issues that can arise during negotiations, application, and interpretation of tax treaties, allowing the participants to get first-hand experience in negotiating. It took the form of a simulated negotiation of a bilateral double-tax treaty between two fictional countries, which are ‘Fredonia’ and ‘Utopia’. The simulated negotiation was based on a hypothetical treaty model each country presented, the tax treaties that each of them has signed with other countries, ‘Lilliput’ and ‘Atlantis’, respectively, and the tax systems of the two countries. Each participant became an active debater, assigned to two teams-one representing ‘Utopia’, the other representing ‘Fredonia’. All teams were assigned an instructor to help their group discussions and each member had an equal opportunity to lead the discussions. 

To prepare for the discussion, participants were given a description of the basic facts and tax laws of two fictional countries, Utopia and Fredonia, and a preview of the contents of Utopia's model treaty, Fredonia's model treaty, Utopia's latest treaty with Atlantis, and Fredonia's latest treaty with Lilliput. They had time to prepare for the negotiations through discussion, and after, they negotiated in groups. All the discussion were conducted in English, however, the participants reported that they had no difficulties in participating in such a discussion when a survey was conducted afterward.

On Day 1 of the event, including the opening ceremony, the participants discussed Articles 1-4 (Covered Persons, Covered Taxes, General Definitions, Resident) and Fredonia's Article 12A (Fees for Technical Services) of the Treaty. On Day 2, they covered Articles 5 through 9 (Permanent Establishment, Business Profits, Real Estate Income, International Transportation, related parties) and Fredonia's 12A (Royalties for Technical Services). On Day 3, they covered Articles 10 through 13 (Dividends, Interest, Royalties, Capital gains), and on Day 4, covered Articles 15 through 21 (Employment Income, Remuneration of Directors and Senior managers, Entertainers and Athletes, Pensions, Government Services, Students, and other income). On the final day, Day 5, they covered the issues remaining and the event was concluded with a closing ceremony.

In preparation for the negotiations, the participants were able to compare and contrast the provisions of the two countries present, study the materials provided in advance, and conduct the negotiations, which allowed them to expand their practical skills and knowledge of the negotiation process. Before the event, many participants marked “not familiar” and “very unfamiliar”. However, most of them marked “knowledgeable” and “highly knowledgeable” after the event. Participants reported that the process of experiencing negotiations in groups was great; they liked the way they learned through practical, hands-on activities. They reported the course materials and content were well-organized and appropriate. and the interaction with the instructor was appropriate.