O.E.C.D. Issues Proposed Changes To Permanent Establishment Provisions Under Model Tax Convention

On July 11, 2017, the O.E.C.D. Committee on Fiscal Affairs released the draft contents of the 2017 update to the O.E.C.D. Model Tax Convention (the "O.E.C.D. M.C.") and the Commentary prepared by the Committee's Working Party 1 (the "Draft Contents"). This article discusses, in detail, the proposed amendments to Article 5 (Permanent Establishment)¹ in the 2017 update to the O.E.C.D. M.C. and Commentary, as well as the background and reasoning for the amendments in light of the Final Report on Preventing the Artificial Avoidance of Permanent Establishment Status, Action 7 ("Action 7 Final Report").

The update has not yet been approved by the Committee on Fiscal Affairs or by the O.E.C.D. Council, although significant parts of the 2017 update were previously approved as part of the B.E.P.S. package. The update will be submitted for approval by the Committee on Fiscal Affairs and the O.E.C.D. Council later this year.