handbook-tb

Adolfo Martín Jimenézdebts) connected with the sales belong to companies of the same grouplocated abroad in tax environments more favourable than that offeredby the source country.Despite what Action 7 seems to suggest, focusing on strict commissionairearrangements would confer too narrow a scope on therelevant analysis. A broader study of commissionaire-like or otherprofit-stripping structures having the same effect 17 might be needed,because if changes were to affect “commissionaire structures” only, theresulting norm would be easy to avoid. 18 The abundance of differentforms of outsourcing and organization of value chains and businessmodels also favours provision of general solutions rather than themaking of ad hoc agreements on a specific type of structure alone. 19The OECD Public Discussion Draft on BEPS Action 7 has, however,adopted a rather narrow approach. It assumes as a policy principlethat “where the activities that an intermediary exercises in a countryare intended to result in the regular conclusion of contracts to be performedby a foreign enterprise, that enterprise should be considered tohave a sufficient taxable nexus in that country unless the intermediaryis performing these activities in the course of an independent business.”20 To implement that policy principle, the OECD proposes four17For instance, contractual arrangements with the same effect as commissionaireagreements in common law countries, or risk-stripped structuresin subsidiaries which minimize profits in the source State, either as adistributor or as a manufacturer (for example, conversion of contract manufacturersto toll manufactures). All of these have similar features and operateby transferring risks from the source country to the residence country of theentity to which most of the profits are attributed. For simplicity, the term“commissionaire-like structures or agreements” will sometimes be used torefer to this group of tax planning techniques which are based on strippingrisks from subsidiaries in source countries.18R. Collier, “BEPS Action Plan, Action 7: Preventing the ArtificialAvoidance of PE Status,” supra note 11, at 641-642.19On outsourcing, see P. Desai and S. Goradia, “Cross Border Outsourcing:Issues, Strategies and Solutions,” in Cahiers de droit fiscal international(The Hague, The Netherlands: Sdu Uitgevers, 2014) Vol. 99a.20OECD, Public Discussion Draft, BEPS Action 7: Preventing the ArtificialAvoidance of PE Status, supra note 6.332