PROBLEMS OF DEFINING THE CONTENT OF THE CONCEPT OF «PERMANENT REPRESENTATION OF A NON- RESIDENT» IN THE TAX LEGISLATION OF UKRAINE

Abstract

This article examines the definitional challenges surrounding the concept of a “permanent representation” in Ukrainian legislation. It identifies inconsistencies in the use of this concept in the Tax Code of Ukraine as well as in Ukraine’s bilateral tax treaties on the avoidance of double taxation.The analysis focuses on Article 5 of the OECD Model Convention on Income and on Capital, establishing that the term “permanent representation” in that context most closely aligns with a specific case of a taxable fixed place of business of a non-resident, created by an agent (representative) acting on behalf of such non-resident.Particular attention is given to the more precise terminology employed in the legislation of European Union member states. The article argues that Ukraine’s terminological difficulties, rooted in the Soviet (Russian) legal tradition, stem from the outdated concepts in the regulation of international tax relations.It is further emphasized that the term “permanent representation” as defined in Ukrainian tax law captures only a limited aspect of the respective concept, rather than its full scope. As a result, the continued use of this term is not only unjustified but also inappropriate, complicating the regulation of tax relations and creating difficulties in legal practice.The author recommends amending the Tax Code of Ukraine to ensure a more accurate delineation of this concept, particularly in light of the increasing role of digital technologies in taxation. Specifically, it is proposed that the term “permanent representation” be replaced by more precise terminology, such as “permanent place of business.”