Study On The Problem Of Attribution Of Profits To A Permanent Establishment In Context Of E-Commerce

The problem of Attribution of Profits to a Permanent Establishment is: in international taxation, how can a contracting state determine the extent and level of taxable profits (taxable income) of another contracting state's permanent establishment situated therein, which involves the principles and specific method of profits attribution. On the basis of analysis on the problem mentioned above, the article tries to study the problem of Attribution of Profits to a Permanent Establishment in context of E-Commerce. The article consists of four chapters, The first chapter summarizes the problem of Attribution of Profits,and mainly discusses the basic principle of Attribution of Profits to a Permanent Establishment. Beginning with a brief introduction of it origin, the chapter incorporates the latest commentary on the OECD Model Tax Convention to summarize the principle of Attribution of Profits to a Permanent Establishment , and then makes a general analysis on some countries' policy during the application of the principle. The second chapter discusses the detailed method of application principle mentioned above. There are two guide lines when the principle is applied to determine a Permanent Establishment's taxable profits: the first is Gross profit principle; and the second is Arm's length principle. After analysis on the merit and demerit of the two guidelines, the article introduces the specific method of adjusting the transfer price. The third chapter is mainly about the impact of the Electrical Commerce on the attribution of profits to a Permanent Establishment and corresponding taxation policies. First, it introduces the development of the Electrical Commerce, and then concretely analyzes its impact. Besides, the chapter also makes reference to the policy choice and viewpoints of the developing countries, developed countries, the international organizes and transnational investors. It finally comes to a conclusion:At this stage, e-commerce models resulting from new communication technologies would not, by themselves, justify a dramatic departure from the current rules.The fourth chapter explores the detailed project of the attribution of profits to a Permanent Establishment in context of Electrical Commerce. Based on unifying the premises of study, the chapter incorporates the latest conclusion of OECD, classifies the Permanent Establishment in context of Electrical Commerce, and studies the detailed project of attribution of profits to a Permanent Establishment in context of Electrical Commerce. At the end, it brings forward corresponding suggestions to the mentioned problem in china.