In media release No 2012/036, issued 24 May 2012, the Assistant Treasurer and Minister Assisting for Deregulation, David Bradbury, announced that he has commissioned the Board of Taxation to investigate the impacts of Australia adopting the Authorised OECD Approach in respect of the attribution of profits to permanent establishments.
The OECD endorsed the 'functionally separate entity approach' in 2010, which differs from the method for attribution of profits to PEs currently used in Australia, however this approach has had uneven take-up internationally.
"It makes sense to ask the Board to look at all the impacts now in a considered way as we move to assess what the right policy response for Australia is in this area," said Mr Bradbury.
As part of the review, the Board will also look at the cap that currently exists on the interest rates on certain international interbank loans, which is currently set by the London Interbank Offered Rate (LIBOR), including those between an Australian bank and its foreign head office.
The Terms of Reference for the Board's review are available in the attachment to the media release.
The Board will report to the Assistant Treasurer by 30 April 2013.