Permanent establishment taxation: profits attributable to a PE may be taxed in the other State based on separate enterprise principle. Profits of an enterprise are taxable only in its State 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 must be attributed as if the permanent establishment were a separate independent enterprise; reasonable estimates are permitted when precise determination is impracticable. Deductible are expenses incurred for the permanent establishment, but not amounts beyond reimbursement paid between the establishment and head office by way of royalties, fees, commissions, management charges or, except for banks, interest. No profits arise from mere purchases, and attribution methods should be consistent year to year.
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 taxation: profits attributable to a PE may be taxed in the other State based on separate enterprise principle.
Profits of an enterprise are taxable only in its State 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 must be attributed as if the permanent establishment were a separate independent enterprise; reasonable estimates are permitted when precise determination is impracticable. Deductible are expenses incurred for the permanent establishment, but not amounts beyond reimbursement paid between the establishment and head office by way of royalties, fees, commissions, management charges or, except for banks, interest. No profits arise from mere purchases, and attribution methods should be consistent year to year.
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