Categories of Cloud-based services (p.132)
The models for providing cloud-based services have traditionally been divided into three categories: Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (laaS). SaaS offers ready-made applications for end-users. PaaS is more like an operating system, such as Microsoft Windows Azure, which allows the client to design applications with appropriate programming tools. laaS is the most open-ended solution, where the end-user has the largest degree of control over the technology in which an organization outsources the equipment used to support operations, including storage, hardware, servers and networking components.
[I]ntegration Platform as a Service (iPaaS)… is a cloud integration platform, enabling connectivity to SaaS and other cloud services, and it offers a platform for SaaS users and cloud vendors to build and host packaged integration solutions which ensure that the data provided is available in a synchronized fashion across mobile, social and online mechanisms….
Use of Cloud reduces incidence of a server in source jurisdiction (pp.138-9)
In the pre-cloud era, this erosion of tax base could to some extent be mitigated by the "server as PE" rule whereby the maintenance of a server in the source jurisdiction would allow its tax authorities to contend that the server constituted a permanent establishment for tax treaty purposes. But with the widespread shift of e-commerce to the cloud it is no longer plausible to count on this rule to effectively deal with the problem because the server need not be located in the source jurisdiction….
[T]here is widespread consensus that using another entity's server will rarely, if ever, lead to the creation of a PE….
See also summary under Treaties – Art. 9.
Categories of Cloud-based services (p.132)
The models for providing cloud-based services have traditionally been divided into three categories: Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (laaS). SaaS offers ready-made applications for end-users. PaaS is more like an operating system, such as Microsoft Windows Azure, which allows the client to design applications with appropriate programming tools. ...
[I]ntegration Platform as a Service (iPaaS)… is a cloud integration platform, enabling connectivity to SaaS and other cloud services, and it offers a platform for SaaS users and cloud vendors to build and host packaged integration solutions which ensure that the data provided is available in a synchronized fashion across mobile, social and online mechanisms….
Disguised transfers of intangibles while under the Cloud (p.143)
[i]n the cloud it might be relatively easy to conceal a number of intangibles which would normally have to be transferred independently, especially if they are disguised as part of the overarching cloud infrastructure rather than as individual components transferred .within it….
[I]f more than just one intangible is transferred between S1 and S2 [two subs] while they are under the iPaaS "umbrella" it will be virtually impossible to evaluate each transfer separately because all of them will be integrated by the iPaaS and are also likely to derive most, if not all, of their functionality from being integrated by it. This difficulty will then trickle down to the next level affecting the choice of differing tax treatments of the respective individual subtransactions….
See also summary under Treaties – Art. 5.
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