Pascal Saint-Amans, director, OECD Centre for Tax Policy and Administration (CTPA), said: ‘The growing digitisation of the economy is having a major impact on the structure of tax systems but we have rejected the ring fence solution because the digital economy is the economy itself. Instead we have a number of BEPS measures which are very important in the gradual elimination of double non-taxation.’

These include modifying the list of exception to the definition of permanent establishment (PE) status to ensure that each of the exceptions is restricted to activities that are otherwise of a ‘preparatory or auxiliary’ character.  There is a new anti-fragmentation rule to ensure that it is not possible to benefit from these exceptions through the fragmentation of business activities among closely related enterprises.

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