Oxford Economics' independent study, commissioned by ICC, assesses the economic impact of Article 12AA, a new UN tax rule on cross‑border services. It examines effects on trade and investment, with a focus on how developing countries will be affected.
Article 12AA is a recently introduced provision in the UN Model Tax Convention that expands source‑country taxing rights over cross‑border services. Oxford Economics independent study, commissioned by the International Chamber of Commerce, provides the first economic assessment of the potential effects of this provision. The report finds that the estimated revenues from raising taxes on services bought from abroad would be fully offset by indirect losses caused by reduced services trade, lower foreign direct investments and weaker economic growth. Once these effects are taken into account, developing economies face a net fiscal loss of around US$ 241 million per year. The new provision is expected to increase the cost of cross‑border services and lead to adjustments in trade patterns, particularly for developing economies where service imports are significant. These shifts may also have spillover effects on goods trade, foreign direct investment, and non‑extractive GDP, reflecting the interconnected nature of global value chains. Join the leading author of the report Thang Nguyen (Oxford Economics), John Connors (Chair of the ICC Global Tax Commission) and Luisa Scarcella (ICC Global Policy Lead Tax) for an in-depth discussion on the new provisions' effects on trade and investment.
Watch the economic Impact Assessment Art. 12AA UN Tax model (INC-4 Side Event)!Side Events
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