Legal Basis for Determining the Tax Base of a Foreign Organization Operating through a Permanent Establishment

The article gives a legal description of the existing world practice approaches to determining the tax base of a foreign organization operating in any jurisdiction through its permanent establishment. The position of the Organization for Economic Cooperation and Development (OECD) is analyzed in relation to each of the considered approaches to the definition of taxable income of the permanent establishment, namely approaches related to the degree of "gravity", fractional and actual approaches to the classification of profit to the permanent representative of a foreign organization. The author considers in detail the use of the "separate and independent enterprise" approach as the "official approach of the Organization for Economic Cooperation and Development" to determine the profit of an organization attributable to its permanent establishment. Special attention is given to conducting a functional analysis of the activities of the permanent establishment as one of the main stages in determining the size of the profit of a foreign organization related to the permanent establishment.

corporate income tax, corporate income tax base, Organization for Economic Co-operation and Development (OECD), OECD Model Convention, Comments to the OECD Model Convention, Permanent Representation, Permanent Representation Profit, "separate and independent enterprise" approach, functional analysis

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