The discussion draft on BEPS action 7: reform of PE status

Dr Richard Collier

Speed read

The OECD has now released its discussion draft on the reform of the permanent establishment (PE) rules. Although one of the shortest BEPS papers so far released, it contains a number of proposals which, taken together, would lead to a quite fundamental change to the operation of the existing PE rules, with a potentially wide impact on many structures and arrangements currently adopted by MNCs. The proposals, which include widening the dependent agent provisions and narrowing both the independent agent exemptions and the specific activity (e.g. warehouses) exemptions, go beyond the PE areas identified for review in the original BEPS action plan. There is a clear influence in the discussion draft of the BEPS work on the digital economy

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