Užsienio įmonių nuolatinių buveinių apmokestinimo metodų pasirinkimo dilema

Abstract

In the global economy activities of enterprises extend to the territory of more than one country. It means that business profits of enterprises may become subject to tax in several jurisdictions. When countries apply different taxation rules, situations of double taxation or less than single taxation are likely to occur. In order to avoid these negative consequences, countries have to approximate, to the extent possible, their domestic tax laws. The Organisation for Economic Co-operation and Development [OECD] undertook the initiative for co-ordination of such efforts, presenting the working hypothesis on uniform application of a „functionally separate entity“ method for taxation of permanent establishments of foreign enterprises. Lithuania, developing its own taxation model of permament establishments, is facing the dilemma of choice between the taxation methods existing in the international practice. This article discusses the existing methods of taxation of permanent establishments as well as strengths and weaknesses of the „functionally separate entity“ method as proposed by OECD. The article also elaborates on possibilities of application of these methods in the Lithuanian practice.