Profit attribution to permanent establishments: propose Rule 10 amendments to apportion profits by sales, employees, assets and users. The Committee recommends amending Rule 10 to prescribe objective apportionment formulas for profits attributable to a PE: a three factor apportionment (equal weight to sales, employees/wages and assets) with 'profits derived from India' computed as India revenue x global operational (EBITDA) margin subject to a 2% revenue floor; and, where users materially contribute (SEP), a four factor formula including users with weights of 10% (low/medium intensity) or 20% (high intensity), with deductions for profits already taxed in India in the hands of associated resident enterprises.
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Provisions expressly mentioned in the judgment/order text.
Profit attribution to permanent establishments: propose Rule 10 amendments to apportion profits by sales, employees, assets and users.
The Committee recommends amending Rule 10 to prescribe objective apportionment formulas for profits attributable to a PE: a three factor apportionment (equal weight to sales, employees/wages and assets) with "profits derived from India" computed as India revenue x global operational (EBITDA) margin subject to a 2% revenue floor; and, where users materially contribute (SEP), a four factor formula including users with weights of 10% (low/medium intensity) or 20% (high intensity), with deductions for profits already taxed in India in the hands of associated resident enterprises.
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