Taxation Law Research Programme (TLRP)
Autonomous AI and the Permanent Establishment Threshold. When Does a System Create a Taxable Presence, and What Follows for Asia

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Article 5 of the OECD Model was written for enterprises whose presence in a market takes the form of premises, equipment or people. Autonomous AI systems now conduct sustained and economically significant commercial activity in markets where the enterprise has none of the three. Drawing on a four-part series published in Tax Notes International in 2026, this presentation first shows why each limb of article 5 fails for such systems, the fixed place, the dependent agent and the exceptions for preparatory activity, and why the reforms already proposed, from significant economic presence to the treatment of software as a treaty person, fall short of the problem. It then sets out an autonomous AI nexus built on a deployment test and an economic effects test, with a chain attribution rule that assigns source country nexus to the enterprise holding the direct commercial relationship with end users, and that expressly avoids conferring personality on the system.
The final part turns to the region. It examines what the analysis implies for regional headquarters, shared service centres and related structures in Asia, for compute jurisdictions hosting the infrastructure from which such systems are deployed, and for the treaty position of a territorial-basis jurisdiction such as Hong Kong.

Speaker:
Lucas Gribinski is a doctoral researcher and teaching assistant at the Faculty of Law of the University of Geneva, where he writes under the supervision of Professor Xavier Oberson on transfer pricing in the digital economy. He holds an LL.M. from the UCLA School of Law and serves as IBFD Country Correspondent for Switzerland for the Tax Treaty Case Law collection. He is the author of a four-part series in Tax Notes International on autonomous artificial intelligence and permanent establishments, and co-author with Reuven S. Avi-Yonah of Taxing the Model Owners: A Flag State Regime for Artificial Intelligence. In 2026 he contributed to the OECD consultation on the revision of Chapter VII of the Transfer Pricing Guidelines.

Chair:
Prof Wilson Chow, AIIFL Fellow & Associate Professor, Faculty of Law, The University of Hong Kong