ICC Document & publication

ICC Comments to Additional Guidance on the Attribution of Profits to Permanent Establishments

In the context of the OECD Base Erosion and Profit Shifting (BEPS) Project mandated by the G20, ICC submitted high level and fundamental comments on the OECD’s Discussion Draft on Additional Guidance on the Attribution of Profits to Permanent Establishments.

ICC submitted high level and fundamental comments to OECD’s Discussion Draft on Additional Guidance on the Attribution of Profits to Permanent Establishments, which deals with work in relation to Action 7 (“Preventing the Artificial Avoidance of Permanent Establishment Status”) of the BEPS Action Plan.

Following the conclusion of the Report on Action 7, the need for additional guidance on how the rules of Article 7 would apply to PEs resulting from the changes in the Report was noted, in particular for PEs outside the financial sector. There is also a need to take account of the results of the work on other parts of the BEPS Action Plan dealing with transfer pricing, in particular the work related to intangibles, risk and capital. Realistically, however, work on attribution of profits related to Action 7 could not be undertaken before the work on Action 7 and Actions 8-10 had been completed. For that reason, and based on the many comments that have stressed the need for additional guidance on the issue of attribution of profits to PEs, follow-up work on attribution of profit issues related to Action 7 will be carried on after September 2015 with a view to providing the necessary guidance before the end of 2016.

To this end, ICC has provided comments for the OECD’s consideration.