Issues regarding Permanent Establishments and Profit Attribution in Light of the OECD View

This article considers the 2007 judgement of the Supreme Court of India in Morgan Stanley and examines it both from the attribution side of Art. 7 and from the perspective of the PE triggering factors in Art. 5. Before examining the judgement, the article discusses where the OECD currently stands regarding certain aspects of profit attribution and describes the axiom of the OECD system: the "all determinative" functions, which serve as the magnet for assets, risks and capital. The article also discusses the 2007 decision of the Income Tax Appellate Tribunal of Mumbai in SET Satellite and its choice for the OECD dual taxpayer approach. The article concludes that, contrary to the opinion of others, a close reading of Morgan Stanley indicates support for the dual taxpayer approach. Bulletin for International Taxation - Issue No. 5 (2008)