The Concept of “Economic Presence” for the Taxation of Cross-Border Corporate Income in the OECD Area of Activities

Rafał Lipniewicz

doi:10.18778/1509-877X.2024.04.01

Authors

Rafał Lipniewicz University of Wroclaw, Faculty of Law, Administration and Economics, European Union Research and Documentation Centre https://orcid.org/0000-0002-2171-9415

DOI:

https://doi.org/10.18778/1509-877X.2024.04.01

Keywords:

permanent establishment, digitalisation, economic presence, Pillar One, Amount A

Abstract

For several years, the OECD has been conducting analyses to adapt the taxation model of cross-border corporate income. This is in response to changing strategies for entering foreign markets, especially for digital economy companies that may not require a physical presence in the expanded market country. The paper examines the new nexus based on the concept of “economic presence” in the light of the erosion of the permanent establishment in the digital economy. Its main purpose is to assess the consequences of the introduction into international taxation of a mechanism that allows a source country to tax the income of a foreign company in the absence of traditional, “physical” manifestations of the presence of such a company in that country.

Downloads

Download data is not yet available.

References

Avi-Yonah R., Kir A., Building the Gateway: Why the Two Pillars Need Each Other, “U of Michigan Public Law Research Paper” 2024, no. 24-023, https://doi.org/10.2139/ssrn.4766111
Google Scholar DOI: https://doi.org/10.2139/ssrn.4766111

Bardopoulos A.M., eCommerce and the Effects of Technology on Taxation, Cham–Heidelberg–New York–Dordrecht–London 2015, https://doi.org/10.1007/978-3-319-15449-7
Google Scholar DOI: https://doi.org/10.1007/978-3-319-15449-7

Bunn D., Response to the United States Treasury Department’s Request for Public Input on Pillar One, 2023, https://taxfoundation.org/research/all/federal/treasury-public-input-pillar-one-response/ (accessed: 11.02.2024).
Google Scholar

Bunn D., Testimony: The OECD’s Pillar One Project and the Future of Digital Services Taxes, March 7, 2024, https://taxfoundation.org/research/all/federal/pillar-one-digital-services-taxes/ (accessed: 11.02.2024).
Google Scholar

Cooper G.S., Building on the Rubble of Pillar One, “Bulletin for International Taxation” 2021, no. 11/12, https://doi.org/10.59403/q2700q
Google Scholar DOI: https://doi.org/10.59403/q2700q

Dourado A.P., Would Pillar One Fix the Broken System?, “Intertax” 2023, no. 12, https://doi.org/10.54648/TAXI2023083
Google Scholar DOI: https://doi.org/10.54648/TAXI2023083

Gravelle J.G., The OECD/G20 Pillar 1 and Digital Services Taxes: A Comparison, “Congressional Research Service”, 1 April 2024, R47988.
Google Scholar

Hongler P., Pistone P., Blueprints for a New PE Nexus to Tax Business Income in the Era of the Digital Economy, “IBFD Working Paper”, 20 January 2015, https://doi.org/10.2139/ssrn.2586196
Google Scholar DOI: https://doi.org/10.2139/ssrn.2586196

Jamroży M., Majdowski F., Permanent Establishment in Digital Business, “Studia Prawno-Ekonomiczne” 2022, vol. 122, https://doi.org/10.26485/SPE/2022/122/1
Google Scholar DOI: https://doi.org/10.26485/SPE/2022/122/1

Kamiya T., NexusPillar 1: The Aim of “Fair” Distribution of Profits and Taxing Rights among Countries, [in:] Justice, Equality and Tax Law, eds. N. Čičin-Šain, M. Riedl, Wien 2022.
Google Scholar

Laskowska M., Nowe międzynarodowe reguły podziału dochodu w gospodarce cyfrowej według OECD, “Przegląd Podatkowy” 2020, no. 12.
Google Scholar

Laskowska M., Nowy mechanizm administrowania CIT na poziomie globalnym. Nowe podejście do administrowania globalnym rozliczaniem podatku dochodowego w świetle projektu OECD Filar I, 2023, https://casp.sgh.waw.pl/blog/nowy-mechanizm-administrowania-cit-na-poziomie-globalnym (accessed: 11.02.2024).
Google Scholar

Lipniewicz R., Jurysdykcja podatkowa w cyberprzestrzeni. Model międzynarodowego opodatkowania dochodu, Warszawa 2018.
Google Scholar

Lipniewicz R., Podatkowy zakład zagraniczny. Koncepcja i funkcjonowanie, Warszawa 2017.
Google Scholar

Litwińczuk H., Międzynarodowe prawo podatkowe, Warszawa 2021.
Google Scholar

Michel A.N., Bold International Tax Reforms to Counteract the OECD Global Tax, Policy Analysis no. 968, Cato Institute, Washington, 13 February 2024.
Google Scholar

Mirembe R., Filar pierwszy: jest porozumienie! Kto na nim skorzysta?, “Analizy i Studia CASP” 2023, no. 1.
Google Scholar

Schaefer B., International Taxation of Electronic Commerce Income: A Proposal to Utilize Software Agents for Source-Based Taxation, “Santa Clara High Technology Law Journal” 2000.
Google Scholar

Singh M.K., Taxing E-Commerce on the Basis of Permanent Establishment: Critical Evaluation, “Intertax” 2014, no. 5, https://doi.org/10.54648/TAXI2014034
Google Scholar DOI: https://doi.org/10.54648/TAXI2014034

Skaar A.A., Permanent Establishment: Erosion of Tax Treaty Principle, Alphen aan den Rijn 1991.
Google Scholar

VanderWolk J., Digital Business and Corporate Income Taxation: Is Value Creation’s Role Overstated?, “Tax Notes International”, 8 October 2018.
Google Scholar

Woźniak T., Powstanie zakładu a unikanie opodatkowania w międzynarodowym prawie podatkowym, LEX/2022, https://doi.org/10.33226/0137-5490.2022.1.4
Google Scholar DOI: https://doi.org/10.33226/0137-5490.2022.1.4