The Organisation for Economic Cooperation and Development (OECD) today released a report as additional guidance on the attribution of profits to a permanent establishment. The OECD report was issued pursuant to Action 7 of the base erosion and profit shifting (BEPS) project.
Read the OECD report—Additional Guidance on the Attribution of Profits to Permanent Establishments (BEPS Action 7).
As noted in today’s OECD release, a report issued in 2015 under BEPS Action 7 recommended changes to the definition of permanent establishment (PE) in Article 5 of the OECD Model Tax Convention, specifically concerning whether a non-resident enterprise must pay income tax in another country. In particular, the BEPS Action 7 report recommended changes aimed at preventing the use of certain common tax avoidance strategies used to circumvent the existing PE definition. The OECD report also called for the development of additional guidance on how the existing rules on attribution of profits to PEs under Article 7 would apply to PEs resulting from the recommended changers (in particular for PEs outside the financial sector), taking into account the revised guidance contained in the report on aligning transfer pricing outcomes with value creation (Actions 8-10 Report, OECD 2015).
The additional guidance released today:
© 2018 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.