Concept of Permanent Establishment and Electronic Commerce

Gurram Ramachandra Rao

Today, tax administrations throughout the world face the formidable task of protecting their revenue bases without hindering the development of new technologies. The challenges posed to tax systems worldwide by Electronic Commerce (EC) are real. Numerous governments and fiscal organizations and institutions (e.g. the OECD) are focusing on how to address them in a spirit of collective co-operation. The allocation of taxing rights must be based on mutually agreed principles and a common understanding of how these principles should be applied. In addition to the need for consensus between governments, a need for co-operation between governments and business has also been identified.ⁱ