Permanent Establishment And Offshore Taxation

From an e-commerce tax standpoint, the notion of permanent establishment is a key factor for most of the European countries. If an e-business is deemed permanently established in a particular jurisdiction, then it will be taxed in that jurisdiction according to EU Directives. There has been a lot of controversy about whether the presence of websites and servers in a jurisdiction constitute a taxable presence in this jurisdiction. According to the Organization for Economic Cooperation and Development (OECD,) the presence of a website alone is not sufficient to constitute permanent jurisdiction. This summary illustrates the readers on the OECD approach to the issue of permanent establishment for e-commerce tax purposes.

The following questions have been addressed in this article:

Why is the location of the web server important?
Does a web server constitute permanent establishment for tax purposes?
What exactly constitutes permanent establishment?
What are the consequences for offshore e-businesses?

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