Proceedings of The 3rd International Conference on Research in Business, Management and Economics
Analysis of Taxation of Income-Related To Permanent Establishment According To the OECD Model
MSc. Matjaž Kovač
Forein Enterprises in case of preforming bussines activity and about taxation of income should consider two or more legal systems or else the legal system of the country in which the enterprise have permantent business activity and the legal system of the country in which resident is enterprise or permanent establishment. For most of the form of income, expecialy income from bussines activity and income from investment activity, the problem of double taxation relief is soluted through Model convention OECD for the avoidance of double taxation with respect to taxes on income and capital (Model OECD). The concept of permanent establishment in its substance binds to the notion of double taxation and the elimination thereof. National legislation of the OECD countries differently regulates the taxation of gains tied to the permanent establishment. The development of world trade, transparent treatment of the OECD Model concerning the abolition of double taxation and ecommerce have resulted to determine the general and specific rules concerning which profits belong to the permanent establishment and how and where it could become taxable.
Keywords: taxation, business income, resident, non resident, permanent establishment.