Anti-abuse rule for permanent establishments denies treaty benefits when third jurisdiction tax is materially lower, subject to active business exception. An anti-abuse provision denies Covered Tax Agreement benefits when a resident treats income as attributable to a permanent establishment in a third jurisdiction and profits are exempt in the residence jurisdiction, if tax in the third jurisdiction is less than sixty percent of the tax that would have applied had the permanent establishment been situated in the residence jurisdiction; such income remains taxable under the source jurisdiction's domestic law. The rule includes an active business exception and permits competent authority relief upon request and consultation.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Anti-abuse rule for permanent establishments denies treaty benefits when third jurisdiction tax is materially lower, subject to active business exception.
An anti-abuse provision denies Covered Tax Agreement benefits when a resident treats income as attributable to a permanent establishment in a third jurisdiction and profits are exempt in the residence jurisdiction, if tax in the third jurisdiction is less than sixty percent of the tax that would have applied had the permanent establishment been situated in the residence jurisdiction; such income remains taxable under the source jurisdiction's domestic law. The rule includes an active business exception and permits competent authority relief upon request and consultation.
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