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The OECD Commentary has been amended and now states that “On-site planning and supervision of the erection of a building are covered by paragraph 3. States wishing to modify the text of the paragraph to provide expressly for that result are free to do so in their bilateral conventions.” It follows that, under the OECD Model Article 5. such planning and supervisory activities can constitute a PE, but only if the activities last more than 12 months. Seven OECD countries have lodged reservations to the OECD Model on this point, preferring a six-month threshold.

Deemed PE rules are also commonly included in relation to natural resource activities. Paragraph 2 of Article 5 of the OECD Model includes mines, oil or gas wells, quarries and any other place of extraction of natural resources as PEs. However, a number of countries also include in paragraph 2 places where exploration for natural resources occurs or ships or drilling rigs are used for these purposes.

Some countries prefer to include specific deeming rules for natural resource activities. For example, New Zealand commonly includes a provision in Article 5 that deems activities related to natural resources to be a PE where they are carried on for a substantial period. Other countries such as Israel and South Africa also commonly include deeming provisions in relation to such activities. Several OECD countries, including Canada. Denmark, Ireland, Norway and the United Kingdom, reserve the right to insert a special article relating to offshore hydrocarbon exploration and exploitation and related activities. Such articles usually deem such activities conducted on the continental shelf of a jurisdiction to be carried on through a PE if they exceed a certain time threshold (typically 30 days in any 12-month period). Branch reports indicate that at least some treaties concluded by jurisdictions include such provisions.

Another provision found in a few treaties, especially those negotiated by Australia, Greece and New Zealand, deems a PE to exist where substantial equipment is used or operated. The provisions are sometimes limited to equipment used in natural resource activities, and sometimes have a time threshold, e.g. 12 months.


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