Research On Agency Permanent Establishment Rules In Digital Era

In the era of digital economy,traditional international taxation are being challenged.The new business models based on internet and big data make traditional rules of agent permanent establishment less effective in dealing with the commissionaire arrangements adopted by plenty of transnational companies,giving rise to a larger range of base erosion and profit shifting.Since traditional agent permanent rules caused lot of disputes in both common law and civil law countries,2017 OECD Model made some changes to lower the threshold of agent permanent establishment but brought greater uncertainty to judicial practice.This paper considers that under the context of 2017 OECD Model,"in the name of..."should be understood in a substantial way rather than a literal way.An economic understanding of "binding"should be adopted."Principal Role" rules should be limited to merely regulating commissionaire arrangements to avoid any further abuse.At present,China’s digital economy industry is in a new era of vigorous development and thus plays a significant role as a source country in international taxation.Therefore,when signing new tax treaties,reference should be made to the rules of the 2017 OECD Model to expand the jurisdiction of the source taxation.In the interpretation of the rules of agent permanent establishments,the current rules of Circular 75 should be detailed to clarify the importance of“economic binding" in the determination process.At the same time,new regulatory documents should be developed to regulate and interpret the tax treaties adopting the new rules with reference to the OECD 2017 Model Commentary.The article mainly focuses on agency permanent establishment rules in OECD Models.It consists of an introduction and four parts.The first chapter discusses the theoretical basis and interpretation methods of agency permanent establishments,which lays the groundwork for the analyzing the causes of disputes among different countries.The second chapter mainly introduces the traditional rules on agency permanent establishments before 2017 OECD Model,analyzes the specific connotation of each element,compare the different definition of ’agent’ between civil law and common law countries,and conducts theoretical exploration to eliminate the divergence.The third chapter begins with the impact of the digital economy on the traditional international taxation system,explains the impact of new business models on the rules of agency permanent establishments,and discusses rules of the 2017 OECD Model.The last chapter analyzes the current economic and political situation of China and provides suggestions for the design and interpretation of rules for agency permanent establishments in China.