Miscellaneous 2019

Permanent establishments: Past, present and future

Source: The Tax Specialist Journal Article

Published Date: 1 Feb 2019


In the context of business profits, the ability of a country to tax a non-resident entity of a tax treaty partner is largely dependent on whether that non-resident has a permanent establishment situated within its borders. Broadly, this requires either a sustained physical occupation or the presence of dependent actors that bind the enterprise in the other jurisdiction. While the permanent establishment concept has existed for many decades, in recent years, it has undergone significant changes, as many countries have become increasingly concerned that it does not adequately prevent base erosion and profit shifting tactics employed by multinational enterprises or address challenges posed by the digitisation of business. This article explains the significance of
the permanent establishment concept, when one is created, how this has recently changed under the OECD's base erosion and profit shifting project, and how further changes, particularly in relation to the digital economy, may be on the horizon.


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Miscellaneous 2019

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