Final report of the Technical Advisory Group on Monitoring the Application of Existing Treaty Norms for Taxing Business Profits.
The Technical Advisory Group on Monitoring the Application of Existing Treaty Norms for Taxing Business Profits (the "Business Profits TAG") was set up by the Committee on Fiscal Affairs in January 1999 with the general mandate to “examine how the current treaty rules for the taxation of business profits apply in the context of electronic commerce and examine proposals for alternative rules”. The Business Profits TAG's work resulted in discussion drafts on “Attribution of Profit to a Permanent Establishment Involved in Electronic Commerce Transactions”, which was released in February 2001, and “Place of Effective Management Concept: Suggestions for Changes to the OECD Model Tax Convention”, released in May 2003. This final report, which was prepared in light of comments received on a first draft and was presented to the Committee on Fiscal Affairs in June 2004, deals with the remaining elements of the work programme of the TAG. It examines some of the new business models that have served as background for the TAG’s analysis, summarizes the existing treaty rules for taxing business profits, presents a critical evaluation of these current rules, examines some alternatives and, finally, presents the conclusions and recommendations of the TAG.