Revised OECD Discussion Draft on permanent establishments – PwC Newsflash published


As mentioned in the news alert published on 18 May 2015, the OECD issued a revised discussion draft on preventing the artificial avoidance of permanent establishment (‘PE’) status under Action 7 of the BEPS Action Plan.

The earlier OECD proposals, which set out alternative approaches to a number of significant PE issues, have been replaced by a set of definitive proposals that largely focus on expanding the scope of the dependent agent rule (including narrowing the scope of the independent agent rule) and narrowing the scope of the specific activity PE exemptions. An important element of the package is a proposed anti-fragmentation rule intended to prevent abuse of the PE rules by segregation of activities across associated entities.

Taken together, the proposed rules will clearly expand the scope of existing PE rules.

The PwC Newsflash with respect to the second discussion draft on Action 7 can be found here.