Developments to Article 7 of the OECD Model Tax Treaty and commentary in light of the OECD 2010 report on the attribution of profits to permanent establishments

Abstract

The effects of the growth of multinational enterprises and globalisation in the past fifty to sixty years have been profound, and many international enterprises now operate around the world through branches known as permanent establishments. The business profits Article (Article 7) of the OECD Model Tax Treaty attributes an international enterprise's business profits to a permanent establishment in a host country for tax purposes. This thesis analyses the principles for allocating the profits of international enterprises to permanent establishments under this Article, explains the shortcomings of the current arm's length principle for attributing business profits to permanent establishments and considers alternative methods for allocating business profits.