Course 2:
International Taxation on Permanent Establishment

International taxation refers to the global tax rules that apply to transactions between two or more countries in the world. The article of OECD Commentary provides for the transaction of cross-border business profit business profits of an enterprise. The income from business activities may be taxed in the source state only if the enterprise has a presence as a Permanent Establishment (hereinafter refers to PE). Thus, there is no taxation in the source State if there is no PE

Course Material:

1. Brief Concept of Permanent Establishment and Business Connection on International Tax Perspective:

   • What is Permanent Establishment;
   • Relevance with Business Connection;
   • Permanent Establishment Time Test;
   • The Importance of Negative Test Clause.

2. Permanent Establishment Time Test:

   • Time Test as a threshold of Permanent Establishment;
   • How to calculate Time Test.

3. Types of Permanent Establishment:

   1. Construction and Installation Permanent Establishment:

      • Meaning and relevance with business model
      • Identification of project and measurement of time period

   2. Agency Permanent Establishment:

      • Basic concept: Independent Vs Dependent
      • Criteria to determine independent and dependent agent
      • Conditions to be satisfied for a dependent agent to be regarded as PE
      • Employee or subsidiary as an agent

   3. Service Permanent Establishment

      • Basic concept
      • Service rendered through personnel on second man
      • The limit for emergence of service permanent establishment

4. Attribution of Profit to Permanent Establishment:

   • Method Under Domestic Income Tax Law and Tax Treaty;
   • Direct and Indirect Attribution.

5. Force of Attraction:

   • OECD and Domestic Income Tax Law;
   • Factors to Keep in Mind to Avoid Force of Attraction.

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