Recognition Of Permanent Establishment In International Taxation

After the Second World War, the globalization of economy has promoted thesocial division of labor between countries, and the exchanges of goods, capital andtechnology has been more frequent. There is an important question about how todistributed taxation interests among countries and how to solve the problem ofinternational double taxation. Up to now, international community distributes thetaxation of international income by international treaties of avoidance of doubletaxation, in which the Permanent Establishment principle used to tax the businessincome of nonresidents from source country. And the concept of “PermanentEstablishment” was explained in “Agreement Model for the Avoidance of DoubleTaxation on Income and capital” by organization of Economic and Cooperation andDevelopment(OECD as following for short).As for the significances of taxation, thereorganizations of Permanent Establishment becomes a key point. In order to solvethe various questions related to the interpretation and application of the definition ofpermanent establishment, the Committee on Fiscal Affairs of OECD has public adiscussion draft about the interpretation and application of permanent establishments.