Jetrader - Autumn 2015 - 43
2. Prevent the Artificial
Avoidance of PE Status
The BEPS Action Point 7 discussion draft
seeks to prevent the artificial avoidance
of Permanent Establishment (PE) status.
A PE is essentially a taxable presence created through either the "conclusion of
contracts" in country or by "maintaining
Background
impact
action
Background
impact
action
Background
action
impact
could include increased reluctance of tax
authorities to grant treaty benefits to nonstandard corporate structures used in the
industry, e.g. trust arrangements, entities
with divergence in country of incorporation
and tax residence, etc.
Any changes to treaties following the
implementation of the above proposals will
be concluded via a multilateral instrument,
details of which are planned to be provided
by the OECD in late 2016.
a fixed place of business through which the
business of an enterprise is carried on."
Certain presences are specifically defined
as examples of PEs, including branches,
offices, workshops, etc.
The paper seeks to highlight what it
describes as an artificial avoidance of PE
status under a number of arrangements
which it states has led multinational enterprises to shift profits out of countries where
sales take place without a substantive
change in the functions performed there.
The draft seeks to tighten the definition of what constitutes a PE1. Although
intended to deal with specific arrangements, in reality, this change is likely
to have a wider impact. The OECD has
explained that the policy basis of the rule
change is that where activities that are
exercised in a country are intended to result
in the regular "conclusion of contracts" to
be performed by a foreign enterprise, that
foreign enterprise should be considered to
have taxable nexus in that country.
Clearly for the aviation leasing and
finance industry, this additional focus and
attention on the conclusion of contracts
raises unwelcome, albeit possibly unintended, concerns with the risk that the
current lessor operational approach may
result in triggering a PE in jurisdictions
where customers reside. Historically, aircraft lessors have generally relied on safe
harbour practices such as avoiding the formal "conclusion of contracts" in customer
jurisdictions to mitigate PE exposure.
The overall approach of lowering the
threshold below the "concluding contracts"
test is likely to widen the scope of the rule
and introduce greater subjectivity when
Jetrader * Autumn 2015 43
Jetrader - Autumn 2015
Table of Contents for the Digital Edition of Jetrader - Autumn 2015
A Message from the President
Calendar/News
A Day to Remember
Paris Air Show 2015: One Shade of Grey (and a Little Burgundy)
The Place to Be in Paris
The Second Life of Commercial Aircraft
Europe — On Its Way to Recovery
Shifts Ahead for International Tax Rules
Sign, Consign
Aviation History
Aircraft Appraisals
ISTAT Foundation
Advertiser.com
Advertiser Index
Jetrader - Autumn 2015 - cover1
Jetrader - Autumn 2015 - cover2
Jetrader - Autumn 2015 - 3
Jetrader - Autumn 2015 - 4
Jetrader - Autumn 2015 - 5
Jetrader - Autumn 2015 - 6
Jetrader - Autumn 2015 - A Message from the President
Jetrader - Autumn 2015 - 8
Jetrader - Autumn 2015 - 9
Jetrader - Autumn 2015 - Calendar/News
Jetrader - Autumn 2015 - 11
Jetrader - Autumn 2015 - A Day to Remember
Jetrader - Autumn 2015 - 13
Jetrader - Autumn 2015 - 14
Jetrader - Autumn 2015 - 15
Jetrader - Autumn 2015 - Paris Air Show 2015: One Shade of Grey (and a Little Burgundy)
Jetrader - Autumn 2015 - 17
Jetrader - Autumn 2015 - 18
Jetrader - Autumn 2015 - 19
Jetrader - Autumn 2015 - 20
Jetrader - Autumn 2015 - 21
Jetrader - Autumn 2015 - The Place to Be in Paris
Jetrader - Autumn 2015 - 23
Jetrader - Autumn 2015 - 24
Jetrader - Autumn 2015 - 25
Jetrader - Autumn 2015 - 26
Jetrader - Autumn 2015 - 27
Jetrader - Autumn 2015 - 28
Jetrader - Autumn 2015 - 29
Jetrader - Autumn 2015 - 30
Jetrader - Autumn 2015 - 31
Jetrader - Autumn 2015 - 32
Jetrader - Autumn 2015 - The Second Life of Commercial Aircraft
Jetrader - Autumn 2015 - 34
Jetrader - Autumn 2015 - 35
Jetrader - Autumn 2015 - Europe — On Its Way to Recovery
Jetrader - Autumn 2015 - 37
Jetrader - Autumn 2015 - 38
Jetrader - Autumn 2015 - 39
Jetrader - Autumn 2015 - 40
Jetrader - Autumn 2015 - Shifts Ahead for International Tax Rules
Jetrader - Autumn 2015 - 42
Jetrader - Autumn 2015 - 43
Jetrader - Autumn 2015 - 44
Jetrader - Autumn 2015 - 45
Jetrader - Autumn 2015 - Sign, Consign
Jetrader - Autumn 2015 - 47
Jetrader - Autumn 2015 - Aviation History
Jetrader - Autumn 2015 - 49
Jetrader - Autumn 2015 - 50
Jetrader - Autumn 2015 - 51
Jetrader - Autumn 2015 - 52
Jetrader - Autumn 2015 - Aircraft Appraisals
Jetrader - Autumn 2015 - 54
Jetrader - Autumn 2015 - ISTAT Foundation
Jetrader - Autumn 2015 - 56
Jetrader - Autumn 2015 - 57
Jetrader - Autumn 2015 - Advertiser Index
Jetrader - Autumn 2015 - cover3
Jetrader - Autumn 2015 - cover4
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