A long-term solution for taxing digitalized business models : should the permanent establishment definition be modified to resolve the issue or should the focus be on a shared taxing rights mechanism?

Resource Information

The work A long-term solution for taxing digitalized business models : should the permanent establishment definition be modified to resolve the issue or should the focus be on a shared taxing rights mechanism? represents a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation. This resource is a combination of several types including: Work, Language Material, Continuing Resources.

Label

A long-term solution for taxing digitalized business models : should the permanent establishment definition be modified to resolve the issue or should the focus be on a shared taxing rights mechanism?

Creator

• Chand, V
• Spinosa, L

Subject

• digital PE
• digital economy
• PE
• significant economic presence
• significant digital presence
• allocation of profits

Language

eng

Summary

The article discusses how a jurisdiction can tax a business entity based on digital business models. It has been argued that creating a new nexus by introducing a digital permanent establishment (PE) or a significant economic presence test seems to be an ideal long-term solution. By referring to the work on BEPS Action 7, the authors argue that not all states like to amend the PE definition. Moreover, for states that adopted the amendments to counter artificial avoidance of the PE status, the authors argue that the profits attributable to the PE will be restricted to the limited functions performed by the PE or, when the PE does not perform any functions, the profits attributable will be negligible. As a solution the authors propose new profit allocation rules (such as the profit splitting method)

Citation source

In: Intertax. - Alphen aan den Rijn. - Vol. 46 (2018), no. 6/7 ; p. 476-494

Geographic coverage

International

Language note

English