Book contents
- Frontmatter
- Contents
- Abbreviations
- 1 Introduction
- 2 International taxation: policy and law
- 3 Some shortcomings of the tax treaty system
- 4 History of tax treaties and the permanent establishment concept
- 5 The role of the OECD Model Tax Treaty and Commentary
- 6 Defining the personality of permanent establishments under former Article 7 and the pre-2008 Commentary and the 2008 Commentary
- 7 Intra-bank loans under the pre-2008 Commentary and 1984 Report
- 8 Intra-bank interest under the 2008 Report
- 9 Business restructuring involving permanent establishments and the OECD transfer pricing methods
- 10 New Article 7 of the OECD Model and Commentary
- 11 Unitary taxation
- 12 Conclusion
- Bibliography
- Index
2 - International taxation: policy and law
Published online by Cambridge University Press: 07 September 2011
- Frontmatter
- Contents
- Abbreviations
- 1 Introduction
- 2 International taxation: policy and law
- 3 Some shortcomings of the tax treaty system
- 4 History of tax treaties and the permanent establishment concept
- 5 The role of the OECD Model Tax Treaty and Commentary
- 6 Defining the personality of permanent establishments under former Article 7 and the pre-2008 Commentary and the 2008 Commentary
- 7 Intra-bank loans under the pre-2008 Commentary and 1984 Report
- 8 Intra-bank interest under the 2008 Report
- 9 Business restructuring involving permanent establishments and the OECD transfer pricing methods
- 10 New Article 7 of the OECD Model and Commentary
- 11 Unitary taxation
- 12 Conclusion
- Bibliography
- Index
Summary
Introduction
The national income tax systems of developed countries and principles of tax jurisdiction were shaped in the early years of the twentieth century when their economies were relatively independent and closed. Before World War I income taxes were not used extensively in developed countries and most enterprises restricted operations to their domestic markets, with international trade and investment being limited and heavily regulated. Nevertheless, cross-border investment and commerce were growing, and, in response, countries entered into bilateral tax treaties (tax treaties) with other countries to overcome the double taxation arising from international trade and investment. The network of tax treaties expanded significantly following the development of a model tax treaty by the League of Nations in the 1920s, based on the principles, policies and concepts of the inter-war period. International taxation comprises national tax systems and a network of tax treaties.
While enterprises have globalized, and operate as integrated international businesses, tax authorities typically operate independently with some international cooperation measures, such as information exchange. Many international enterprises have acted deliberately to limit information they provide to tax authorities in the jurisdictions in which they operate, which may prevent tax authorities from having full knowledge about the operations of enterprises. Even though tax treaties contain exchange of information measures, these measures are still underused by tax authorities. Developments in international taxation have not reflected the significant changes in the international trade system that have occurred since the end of World War II. Globalization has created an integrated international economy, and the implications of this change are profound. International enterprises may engage in worldwide tax planning, but at times, the tax planning may amount to tax avoidance. This situation reflects the significant imbalance of power between international enterprises and national tax authorities.
- Type
- Chapter
- Information
- International Taxation of Permanent EstablishmentsPrinciples and Policy, pp. 11 - 64Publisher: Cambridge University PressPrint publication year: 2011