Content area
Full Text
OECD
An Organization for Economic Cooperation and Development report released Dec. 21 has eliminated the "key entrepreneurial risk-taking" (KERT) functions concept from much of its guidance on the attribution of profits to permanent establishments, limiting the concept's application to financial intermediaries. [Report On The Attribution of Profits To Permanent Establishments, Parts I (General Considerations), Il (Banks), and III (Global Trading), OECD Centre for Tax Policy and Administration, 12/06]
The major change made to Part I of the report, which discusses general considerations for PEs, removed the KERT language and replaced it with: "significant people functions relevant to the economic ownership of assets" and "significant people functions relevant to the assumption and/or management (subsequent to the transfer) of risks."
The report said it amended the KERT language because while the extent of the overlap of "significant people functions" relevant to the assumption of risk and the economic ownership of assets will vary from business sector to business sector, there will generally be more overlap between the two in the special categories of financial assets and financial enterprises, which are dealt with in Parts II-IV of the report. Part II address PE issues that...