Permanent establishment profits taxable where attributable to local operations; attribution as separate enterprise governs taxation. Profits of an enterprise are taxable in the State of residence unless it carries on business in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment, related sales or similar activities may be taxed there. Profits attributable to the permanent establishment are determined as if it were a separate enterprise dealing independently, with estimation permitted if precise determination is impracticable. Deductions include expenses incurred for the permanent establishment subject to local law, but not non reimbursement payments between the permanent establishment and head office such as royalties, fees, commissions, management charges or, except for banks, interest; mere purchase of goods does not create attributable 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.
Permanent establishment profits taxable where attributable to local operations; attribution as separate enterprise governs taxation.
Profits of an enterprise are taxable in the State of residence unless it carries on business in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment, related sales or similar activities may be taxed there. Profits attributable to the permanent establishment are determined as if it were a separate enterprise dealing independently, with estimation permitted if precise determination is impracticable. Deductions include expenses incurred for the permanent establishment subject to local law, but not non reimbursement payments between the permanent establishment and head office such as royalties, fees, commissions, management charges or, except for banks, interest; mere purchase of goods does not create attributable profits.
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