Inequitable tax treaties

In the past 50 years a network of over 500 tax treaties has been established which has greatly contributed to the dramatic progress achieved by industrialized countries in exchange of goods and investments. However, whilst essentially fair when used between industrialized countries, the patterns and methods established become inequitable when applied to relations between countries at different levels of development, when investment, and often certain trade components, follow a one-way direction. Developing countries therefore face the dilemma of whether to forgo the tax treaty instrument as an effective tool for stimulating international investment and trade, or to apply the traditional treaty pattern at severe loss of scarce revenue.