Attribution of Profits to a Permanent Establishment – Release of Discussion Draft of Part IV (Insurance)

The OECD has released on 27 June 2005 Part IV and final part of the Report on the Attribution of Profits to a Permanent Establishment. Part IV looks at the insurance industry and discusses how the authorised OECD approach applies to enterprises carrying on an insurance business through a permanent establishment. More specifically, Part IV applies the authorised OECD approach to the operation of property and casualty insurance, life insurance, and reinsurance activities. Comments to the Discussion Draft of Part IV (Insurance) should be submitted by 16 September 2005. The Discussion Draft of Part IV (Insurance) forms part of an ongoing OECD process intended to find a consensus regarding the attribution of profits to a permanent establishment.

Beginning in 1998, OECD launched a project to re-examine Art. 7 of the OECD Model Tax Convention. An initial Discussion Draft was published in February 2001 that focused on both general issues (Part I) and issues relating to the banking sector (Part II). This has been followed by drafts relating exclusively to banking and global dealing issues (Parts II and III) and by a significantly revised and expanded Report on Part I (General Considerations) issued in August 2004. Part IV represents the final part of the Report on the Attribution of Profits to a Permanent Establishment, which will ultimately result in the revision of the Commentary on Art. 7 of the OECD Model Tax Convention and the language of the Article itself. The originally projected completion date of the report is January 2007.

The report in PDF and the press release