고정사업장 과세의 국제적 동향 및 향후 과제

Abstract

In order to apply uniform principles to the attribution of profits to permanent establishments, the OECD published the Attribution of Profits to Permanent Establishments (PE Report) in 2008, followed by a slightly revised version in 2010, which updated Article 7 of the Model Treaty. The approach set out in this report is the Authorized OECD Approach (AOA) to the attribution of profits to permanent establishments. The revised Article 7 of the Model Treaty provides that income attributable to a permanent establishment shall be allocated between the permanent establishment and other entities of the enterprise, taking into account the functions performed, the assets used, and the risks assumed by the enterprise. This section was introduced in the 2010 Revised Report. It stipulates that the income should be what a separate, independent enterprise engaged in the same or similar activities under the same or similar circumstances would have been expected to earn. The AOA is applied according to a two-step approach: in the first step, assets, liabilities, and risks are allocated based on a functional analysis, and then an analysis of the entity’s internal transactions is applied between headquarters and a permanent establishment. In the second step, the income of the permanent establishment is determined based on the analysis in the first step and the independent enterprise principle is applied. Since the formalization of the AOA in Article 7 of the OECD Revised Model Treaty in 2010, several countries have adopted this approach in their domestic laws, including Korea and Germany in 2013 and Japan in 2014. However, there are still many countries that are hesitant to adopt this approach, and the UN Model Convention has rejected this approach. Thus, the goal of uniformity that the AOA sought to achieve has not yet been achieved. In the case of tax treaties, many treaties still contain the pre-2010 version of Article 7. While the most significant achievement of the adoption of the AOA has been to provide clarity and certainty by unifying the approach to the attribution of income to a permanent establishment, the goal of uniformity has not yet been achieved. While the analogical application of the Transfer Pricing Directive allows for corresponding adjustments in the calculation of income between the country of a headquarter and the country of its permanent establishment, the problems that arise in the Transfer Pricing Directive may also be transferred to the attribution of income to the permanent establishment. Moreover, the official approach (AOA) is complex, difficult to apply due to the need to analyze hypothetical situations, and imposes a huge administrative burden on both tax authorities and taxpayers. In 2013, Korea adopted the OECD’s AOA in 2010 and clarified the tax basis for internal transactions in Article 130 of the Enforcement Decree of the Corporate Tax Act to apply the independent enterprise principle to internal transactions between foreign headquarters and domestic permanent establishments. However, legislative improvements are still needed. The statutory wording of Article 132, Paragraph 2, Item 9 of the Corporate Income Tax Act needs to be revised, and the procedures and methods for calculating equity are not yet prescribed. In addition, in order to determine the correct amount of income attributable to a permanent establishment, it is necessary to revise the rules for submitting documents that can identify the facts and substance of the transaction in addition to the internal transaction statement, expense allocation statement, and arm’s length price calculation method declaration related to internal transactions of a foreign corporation’s permanent establishment prescribed by the statute. In this regard, legislative examples from Japan and Germany can serve as a reference.