Market leading insight for tax experts
View online issue

OECD publishes revised PE discussion draft

printer Mail

The OECD invites comments by 12 June 2015 on a new discussion draft for action 7 of the BEPS action plan (see This reflects comments received on the first discussion draft published in October 2014.

The original discussion draft described a number of PE avoidance strategies and included a number of alternative options on how to deal with these strategies. Following a public consultation meeting on 21 January 2015, these options were reviewed in order to produce a specific preferred proposal with respect to each PE avoidance strategy previously identified. This new discussion draft reflects the proposals that resulted from that work and on which comments are now invited.

Writing in this week’s Tax Journal, Richard Collier explains that ‘the OECD is pressing ahead with its agenda of expanding the BEPS permanent establishment (PE) concept. The finalised PE proposals contain a number of specific points that will clearly have an impact on existing structures and arrangements. These result particularly from two areas of change: a materially widened dependent agent rule (and a narrowed independent agent exemption); and the narrowing of the specific activity PE exemptions, coupled with the introduction of a tougher anti-fragmentation rule’ (see page 10).

No public consultation meeting will be held on the proposals included in this second discussion draft, but comments received will be discussed by the G20/OECD Working Party before final recommendations are delivered to the G20 finance ministers’ meeting on 8 October 2015. Changes to double tax treaties are expected from 2017 through a multilateral instrument, unless countries choose to use bilateral protocols to implement changes more quickly.

A revised discussion draft for BEPS action 6 is due to be released on 22 May with a deadline of 30 days after release.