UN Tax Model 2025 Expands Source Country Taxing Rights
On August 28, 2026, the UN released an updated tax model tightening taxation of cross-border services and natural resource activities. The model strengthens developing countries' role in international tax policy.
The United Nations released its 2025 UN Model Double Taxation Convention on August 28, 2026, introducing significant updates to international tax rules. This first major revision since 2021 aims to expand source country taxing rights and modernize the taxation of cross-border services to better reflect current business models.
A key amendment is a new Subject-To-Tax Rule (STTR). This rule allows a source state to deny treaty benefits if the relevant income is taxed at a low rate in the recipient's jurisdiction. Unlike the OECD's STTR, this provision is not limited to related-party transactions and applies more broadly.
Furthermore, the model introduces a specific provision for permanent establishment (PE) related to natural resource activities. Under this rule, a foreign enterprise engaged in exploration or exploitation of natural or renewable resources may be considered to have a PE if activities exceed 30 days within a 12-month period. This could facilitate taxation by source countries in resource-rich regions.
The updated model reflects the UN's increasing influence on international tax policy and the growing role of developing nations. Multinational companies will need to review their tax structures and ensure compliance with these evolving regulations.