: Critics argue that "bricks-and-mortar" definitions do not reflect modern value creation, where data and user participation are the primary drivers of profit.

: Historically, a PE is triggered by a fixed place of business —such as an office, factory, or branch—or through a dependent agent who habitually concludes contracts on behalf of the company.

: Developing nations are disproportionately affected, as they rely more heavily on corporate tax revenue and often lose taxing rights when non-resident entities operate outside the narrow PE definition. Arguments Against the Existing PE Model

: The current framework allows for Base Erosion and Profit Shifting (BEPS) , costing countries an estimated $100–$240 billion annually in lost revenue.

To address these inadequacies, the OECD's Pillar One approach seeks to move beyond physical presence: Base erosion and profit shifting (BEPS) - OECD

: Multinational digital giants can interact with millions of users and extract massive value from a country without having a physical footprint . Under current rules, this often prevents the "source country" (where the customers are) from taxing those profits.