The 2025 Revision of Article 8 of the UN Model Tax Convention: A Paradigm Shift in the Taxation of International Air Transport Income

Helin Li (), Hanshuo Jia () and Xiaoyu Li ()
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Helin Li: Civil Aviation University of China, School of Economics and Management
Hanshuo Jia: Civil Aviation University of China, School of Economics and Management
Xiaoyu Li: Civil Aviation University of China, School of Economics and Management

A chapter in Proceedings of the 2026 4th International Conference on Digital Economy and Management Science (CDEMS 2026), 2026, pp 392-400 from Springer

Abstract: Abstract For over nine decades, international tax law has adhered to exclusive residence-based taxation for international transport income, a principle established by the League of Nations in 1928 and endorsed by the International Civil Aviation Organization (ICAO). However, between 2023 and 2025, the UN Committee of Experts on International Cooperation in Tax Matters undertook a paradigm-shifting revision, introducing source-based taxation as the primary alternative (Alternative A) and explicitly extending Article 8’s scope to international air transport. Through detailed analysis of UN Committee documents from the 28th through 31st sessions (2024-2025), this paper examines the procedural evolution from initial proposals (CRP.14, CRP.12) through the approval of the Subcommittee’s comprehensive proposal (CRP.29) at the 29th session. The paper investigates developing countries’ motivations for advocating source-based taxation, including revenue mobilization imperatives, perceived inequities in the existing system, and alignment with contemporary international tax reforms. This paper identifies critical technical issues raised during Committee deliberations—including treatment of multi-leg journeys, circularity between definitional provisions, and net-basis taxation implications—and analyzes stakeholder positions, particularly the aviation industry’s concerns regarding double taxation risks and administrative complexity. This paper demonstrates that while source-based taxation may address developing countries’ revenue concerns, successful implementation requires careful resolution of technical drafting issues, harmonization with existing bilateral treaties and ICAO policies, and mechanisms to prevent double taxation. This paper concludes with policy recommendations for treaty negotiators, tax administrators, and international organizations navigating this fundamental shift in international air transport taxation.

Keywords: Article 8; UN Model Tax Convention; International Air Transportation; Taxing Rights (search for similar items in EconPapers)
Date: 2026
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DOI: 10.2991/978-94-6239-699-9_42

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