Intermediary services rule alters place of supply, affecting export qualification and tax treatment of cross border service bundles.
Intermediary services determine the place of supply and thus whether a cross border provision qualifies as an export of services; an intermediary facilitates a supply between two principals and does not supply on its own account. Services provided on a principal to principal basis (marketing, support, market research, sales promotion when rendered directly to the foreign principal) are generally non intermediary, whereas facilitation involving three parties supports intermediary character. Taxpayers should analyse and document the nature of each service within bundled arrangements to determine applicable tax treatment. (AI Summary)