Business profits: taxation confined to residence unless attributable to a permanent establishment, with arm's length attribution rules. Profits of an enterprise are taxable only in its State of residence unless it operates in the other State through a permanent establishment; only profits attributable to that PE, including similar sales or activities effected through it, may be taxed there. Profits are attributed by treating the PE as a distinct and separate enterprise under similar conditions, with reasonable estimation permitted where necessary. Deductible expenses incurred for the PE are allowed subject to the taxing State's rules, but non reimbursement charges between PE and head office (royalties, management charges, commissions, and, except for banks, interest) are excluded in determining PE profits.
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.
Business profits: taxation confined to residence unless attributable to a permanent establishment, with arm's length attribution rules.
Profits of an enterprise are taxable only in its State of residence unless it operates in the other State through a permanent establishment; only profits attributable to that PE, including similar sales or activities effected through it, may be taxed there. Profits are attributed by treating the PE as a distinct and separate enterprise under similar conditions, with reasonable estimation permitted where necessary. Deductible expenses incurred for the PE are allowed subject to the taxing State's rules, but non reimbursement charges between PE and head office (royalties, management charges, commissions, and, except for banks, interest) are excluded in determining PE profits.
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