2011 Travelling Lectureship

IFA Travelling Lectureship

The Taxation of Business Profits: Fracture of the International Consensus?

Richard Vann, Challis Professor of Law, University of Sydney

The topic of the 2011 IFA Travelling Lectureship is the developing international tax law on attribution of profits to permanent establishments ((PEs) in the model tax treaty of the OECD and its impact (or lack thereof) on other Models such as the United Nations and on actual treaties. The focus is on the treaty interpretation issues rather than the transfer pricing analysis. The attribution of profits to PEs plays a central role in the taxation of business profits under tax treaties. The issue has been the subject of over 10 years’ intensive work by the OECD leading to the promulgation of a new Article 7 in 2010. It has also been the focus of several important court cases, including in Canada.

Despite the importance of the topic, it seems likely that the outcome of the OECD work will be a significant fracture in the international consensus on attribution of business profits to PEs which will continue to concern tax practitioners and tax officials. The seminar, led by Richard Vann, Challis Professor of Law at the University of Sydney and well known in international tax circles, including in relation to the recent Canadian cases, Knights of Columbus v R and American Income Life v R in which he acted as an expert witness, will explore the policy and technical issues in the attribution of business profits to PEs and will provide participants with insights into the interpretation and application of those issues in tax treaties.  

Course Outline

The Taxation of Business Profits: Fracture of the International Consensus?

8:00-8:30  Registration and Refreshments 
8:30-9:00  Introduction
• Historical and policy background to the attribution of profits to permanent establishments in model and actual tax treaties
9:00-10:30   The Authorised OECD Approach
  • Functionally separate enterprise and relevant business activities approaches
• Old rules of thumb and new rules of thumb (royalties, tangible property, interest, management fees)
• Taxes on deductible amounts
• Resolution of disputes
10:30-11:00  Break
11:00-11:45 Business restructures and attribution of profits
  • Interaction of articles 7 and 9 if PE constituted by separate entity
• Agency PEs and other deemed PE 
Provisions removed from Article 7
• Deduction rule
• Purchase rule
• Formulary apportionment

The seminar will be interactive in nature, combining lectures, case studies, and discussion.  Participants are actively encouraged to engage in the discussions.  In order to facilitate participation, each participant will be provided with course materials serval weeks before the seminar.  These materials will include the General Report, “The attribution of profits to permanent establishments” from the 2006 IFA Congress, various articles by Richard Vann on the issues covered in the seminar, the text and Commentary on Article 7 of the OECD Model Convention, the OECD Attribution Report Part I, selected cases dealing with attribution of profits, and several case studies.  

Dates and Locations

 TORONTO        Wednesday
January 19, 2011    
Room 200 ABC
Allstream Centre
105 Princes Blvd.
 OTTAWA Friday
January 21, 2011
Renaissance Room
Fairmont Chateau Laurier
1 Rideau Street
January 24, 2011
International I
Centre Mont-Royal
2200 Mansfield Street
January 28, 2011 
Royal Room
Metropolitan Conference Centre
333 – 4 Avenue Southwest 
January 31, 2011
East Meeting Room 11
Vancouver Convention Centre
999 Canada Place

ACCOMMODATION: Out of town participants should make their own hotel reservations.

Seminar Leader

Richard Vann

Richard Vann is Challis Professor of Law at the University of Sydney.  In 2006 he was William K. Jacobs Jr. Visiting Professor at Harvard law School and he has taught regularly at New York University School of Law.  He has held many Government consultancies in Australia, including the Review of Business Taxation, the Australian Taxation Office Public Rulings Panels and the Board of Taxation and is a consultant to specialist tax firm Greenwoods & Freehills.  Vann has worked for international organizations for over 20 years – including two fulltime periods for the IMF and OECD.  He is a member of the Permanent Scientific Committee of IFA, chair of the IFA/IECD seminar at the annual IFA Congress and an International Research Fellow of the Oxford University Centre for Business Taxation.