DOWNLOAD PDF

Profit attribution to Permanent Establishments: rule 10 amendment proposes objective three factor apportionment and user factor for digital models. The Committee recommends amending rule 10 to adopt an objective apportionment for profits attributable to Indian operations where separate accounts are unavailable: a three factor formula equally weighting sales, employees (manpower & wages) and assets applied to 'profits derived from India' (revenue from India x global operational profit margin), with a 2% deemed profit floor where global margins are negative or below 2%. For enterprises meeting SEP via user thresholds, a four factor formula including a user factor (10% weight for low/medium user intensity; 20% for high user intensity) is to be applied, with credits/deductions to avoid double taxation when Indian associated enterprises are already taxed.