BEPS MLI

Antigua and Barbuda signs the MLI

On 18 June 2025, the Organisation for Economic Co-operation and Development (OECD) announced that Antigua and Barbuda signed the Multilateral Instrument (MLI). At the time of signature, Antigua and Barbuda submitted a list of tax treaties that it would like to designate as Covered Tax Agreements (CTAs) and submitted a preliminary list of reservations and notifications in relation to the CTAs (MLI positions).

With respect to the permanent establishment (PE) provisions, Antigua and Barbuda made a reservation not to apply any of the PE provisions to its CTAs.

PE domestic law

Finland proposes changes to PE profit attribution

On 30 June 2025, the Finnish Ministry of Finance published a public consultation to align Finland's domestic rules on the attribution of income to PEs with the OECD's 2010 Model Tax Convention (MTC).

The draft introduces detailed provisions for allocating profits to PEs if tax treaties include Article 7 (business profits) consistent with the post-2010 OECD MTC. It also provides guidance for cases in which the applicable tax treaty deviates from the OECD MTC or no treaty exists. The proposed amendments support Finland's adoption of the OECD's "authorized OECD approach" (AOA), reinforcing both the arm's-length principle and the separate-entity concept. Internal dealings, such as notional royalties or service fees between a head office and its PE, would be recognized for tax purposes if consistent with the AOA, and such internal dealings would be deductible when calculating taxable income.

The amendments are expected to take effect on 1 January 2026 and apply to tax years beginning on or after that date.

Vietnam adopts digital PE concept

On 14 June 2025, Vietnam's National Assembly passed Law No. 67/2025/QH15 on Corporate Income Tax (CIT). Among other things, the new law introduces a new digital PE concept.

Under the new law, a foreign enterprise will be considered to have a PE in Vietnam if it conducts business through an e-commerce or digital platform that facilitates the sale of goods or provision of services to customers in Vietnam. The PE definition applies even if the foreign enterprise has no physical presence in the country. The taxable income that the foreign enterprise generates in Vietnam will be subject to CIT in Vietnam. More detailed guidance on this matter will be provided in forthcoming regulations. The new rules will apply from 1 October 2025 and for the tax year 2025 and onward.

It is worth noting that even before the introduction of the digital PE concept, Vietnam already had mechanisms in place to tax income arising from e-commerce and digital-based transactions by foreign enterprises. Since January 2022, foreign enterprises engaging in such transactions have been required to register, declare and pay applicable taxes on a quarterly basis, regardless of PE status.

Importantly, the new Digital PE rule is a domestic law concept and remains subject to Vietnam's tax treaties. If a tax treaty with another country contains a narrower PE definition, that tax treaty will prevail. This means that even if a digital PE exists under domestic law, the foreign enterprise may still be protected from taxation in Vietnam, provided that all the conditions for entitlement to treaty benefits are met.