As noted on this website on 25 January 2001, the OECD has recently clarified the application of the definition of "permanent establishment" in relation to e-commerce. The clarification is to the effect that a website cannot constitute a permanent establishment and that a server owned or leased by a business will only constitute a permanent establishment if the functions performed through the server are a significant and essential or core part of the business.
In relation to consumption tax, the OECD has issued a report from its Working Party on Consumption Taxes proposing to define the place of taxation for cross-border services and intangible property by reference to the recipient's business establishment or place of residence. The report considers a self-assessment mechanism to be the most appropriate approach for business to business transactions. For business to customer transactions the report suggests as a short-term solution the registration of offshore suppliers and, in the longer term, technology-based solutions.
On tax administration the OECD is considering how the administrations can ensure effective tax collection in an electronic environment.