OECD's authorised approach presents challenges
September 27, 2007
By Jan Martens (France), John Neighbour (UK), Damian Preshaw (Australia) and Robin Saunders (UK) of KPMG
For almost 10 years, the OECD has been working to build a global consensus on the attribution of profits to permanent establishments. This culminated in the release, on December 21 2006, of the final version of Parts I to III of the Report on the Attribution of Profits to Permanent Establishments (Parts I (General considerations), II (Banks) and III (Global trading)). The position before the release of the December 2006 document was a lack of consensus globally, with no common interpretation of the Business Profits Article (Article 7 of the Model Tax Convention), little detailed guidance in the Model Commentary on how to apply Article 7 in practice or to specific cases, and no international framework for reconciling differences arising in treatment.
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