Characterization and Taxation of Cross-Border Pipelines
Article from: OGEL 3 (2011), in Pipelines
Abstract
According to OECD Model Tax Treaty and its Commentaries, a cross-border pipeline might be characterized in eight different ways, with significant differences in the taxation. There is no common international approach. This can lead to uncertainty, double taxation and disputes. In particular, there is no common agreement on whether transportation of oil or gas in a cross-border pipeline is of preparatory or auxiliary character, and therefore not a permanent establishment (PE), or whether such transportation is part of the petroleum company's core activity, therefore establishes a ...