Limitations of the concept of permanent establishment and e-commerce

Abstract

The concept of permanent establishment introduced over a century ago became obsolete in the XXI age. It is completely irrelevant in terms of modern online business. Recent OECD initiatives are only a late reaction to the internationally observed legal loophole in taxing profits of e-commerce companies. Steps taken by the international community over the last few years reveal considerable diversity in approaches towards the concept of permanent establishment. Even the key principles to be followed in the development of the new concept of permanent establishment have not been agreed so far. The present article is an attempt to propose the major principles to be followed in updated interpretations of the concept of permanent establishment equally effective in terms of both big multinationals and SMEs.