Attribution of profit to permanent establishment in post-BEPS environment
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Julkaisu on tekijänoikeussäännösten alainen. Teosta voi lukea ja tulostaa henkilökohtaista käyttöä varten. Käyttö kaupallisiin tarkoituksiin on kielletty.
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The pro gradu thesis discusses the development of permanent establishment regulation
in the field of international taxation, most recently due to the Action 7 of the BEPS
project initiated by The Organisation for Economic Co-operation and Development
(OECD). BEPS stands for Base Erosion and Profit Shifting, and describes the aim of the
project well: to halt international tax avoidance and harmful tax practices.
The new regulation and its many channels of implementation will have a material effect
on how the multinational corporations shall plan and execute their businesses, resulting
in changes in supply chains and operating models. This study aims to detect these
changes, and analyze their outcomes regarding existing permanent establishment (PE)
structures, and new PE structures created by the changes in regulation. As a separate
matter, this study addresses the attribution of profits of the entire business operation
between the principal entity and the PE.
The research method of this study is the legal dogmatic method. The integral sources of
information are the OECD publications regarding the BEPS project, in addition to wide
bibliography of Finnish and international tax law literature. Transfer pricing
considerations are of essential importance, and therefore, relevant OECD and Finnish
administrative guidance is utilized and analyzed.
The concluding remarks state that the BEPS project proposes significant changes to the
current PE doctrines, but may fall short of its goals of implementation. It is reasonable
to assume, however, that the updated PE regulation shall be adopted with time due to
OECD’s material influence and EU’s co-operation. In terms of profit attribution the BEPS
does not introduce material changes compared to the updated 2017 OECD Transfer
Pricing Guidance. Rather, it relies on established principles and methods that were
widely used in pre-BEPS structures as well.