tax notes international - Tuck School of Business - Dartmouth College

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dependent agent on behalf of the nonresident enterprise, together with sufficient capital to support those assets and risks. Therefore, the authorized OECD approach is the only one that leads to an outcome that is coherent with the fiction of independence provided in article 7(2). Furthermore, there is no reason why the attribution of profits to an agency PE should be treated differently than the attribution of profits to other types of PEs. The adoption of the single taxpayer approach results in applying the OECD approach in different manners depending on what type of PE is involved, which is clearly unreasonable. Also, the adoption of the single taxpayer approach would make article 5(5) of the OECD model superfluous, which is against one of the main principles that guides the legal interpretation process — that the law does not have useless words. Finally, considerations of a practical nature should not overcome a legal interpretation that is harmonious with the wording of the legal text, and is the reason why the authorized OECD approach should prevail over the single taxpayer approach, even if the former may be a more difficult application in practice. SPECIAL REPORTS The analysis of the relevant case law shows that attribution of profits to PEs is still a controversial issue, although a trend towards the adoption of the authorized OECD approach can be seen. Moreover, the criticisms of the application of the authorized OECD approach to treaties currently in force are somehow weakened as the OECD Committee on Fiscal Affairs adopted, at its meeting of June 24-25, 2008, the revised commentary on the current article 7 of the OECD model and included it in the 2008 update to the model. Tax practice shows that there will always be room to discuss the legal status of the OECD commentary as well as the historical debate between the static and ambulatory interpretation of the commentary. Therefore, the states that concluded OECDpatterned treaties should put all their efforts into implementing the necessary changes to adopt the authorized OECD approach because only a uniform interpretation of article 7 of the OECD model among the states can ensure that no double taxation will arise, greatly benefiting cross-border trade. ◆ TAX NOTES INTERNATIONAL FEBRUARY 2, 2009 • 445 (C) Tax Analysts 2009. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
446 • FEBRUARY 2, 2009 TAX NOTES INTERNATIONAL (C) Tax Analysts 2009. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
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tax notes international Volume 53,
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ARGENTINA 387 Buenos Aires’ New S
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President and Publisher: Christophe
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HIGHLIGHTS from the tax accounts in
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HIGHLIGHTS However, if the firm rec
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HIGHLIGHTS NEWS ANALYSIS Multinatio
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HIGHLIGHTS check by full tax on any
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HIGHLIGHTS U.S. Widens Investigatio
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HIGHLIGHTS is required to withhold
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HIGHLIGHTS by a Canadian taxpayer a
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HIGHLIGHTS Personal Tax Measures Th
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ARGENTINA the most significant exem
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CHINA (P.R.C.) On December 16, 2008
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EUROPEAN UNION ensure that there is
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Page 31 and 32: INDIA Addressing the assessee’s d
Page 33 and 34: INDONESIA As of January 1 and conti
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Page 37 and 38: OECD OECD OECD Group Addresses CIVs
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Page 45 and 46: 410 • FEBRUARY 2, 2009 TAX NOTES
Page 47 and 48: FEATURED PERSPECTIVES We, the taxpa
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Page 51 and 52: BOOK REVIEW smaller government. But
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Page 55 and 56: PRACTITIONERS’ CORNER for German
Page 57 and 58: SPECIAL REPORTS reports were of the
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Page 67 and 68: SPECIAL REPORTS In essence, the fir
Page 69 and 70: SPECIAL REPORTS Figure 6. Single Ta
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Page 75 and 76: SPECIAL REPORTS such a case, the tr
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Page 91 and 92: SPECIAL REPORTS FS A B C Designs X
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