Permanent Establishment taxability case
This query is : Resolved
18 July 2011
Dear Experts, please help me in solving the following query:
Suppose there is a USA company which provides services. Further there is another company in India which falls under the definition of permanent establishment(PE) of the former USA Co.,And there is no other PE for the USA Co. in India.
Further the USA Co. provides any services (which is in nature of business income) to the Indian (PE)Co.
In such a case, whether such income shall be chargeable to tax in India on account of having a PE in India as per article 7 of the DTAA?
Or while applying article 7 is it required that there should be a PE other than the 2 companies transacting?
Suppose there is a USA company which provides services. Further there is another company in India which falls under the definition of permanent establishment(PE) of the former USA Co.,And there is no other PE for the USA Co. in India.
Further the USA Co. provides any services (which is in nature of business income) to the Indian (PE)Co.
In such a case, whether such income shall be chargeable to tax in India on account of having a PE in India as per article 7 of the DTAA?
Or while applying article 7 is it required that there should be a PE other than the 2 companies transacting?
19 July 2011
Such income shall be chargeable to tax in India on account of having a PE in India as per article 7 of the DTAA.
Anuj
+91-9810106211
Anuj
+91-9810106211
19 July 2011
Also kindly see that only profit attributable to operations in India of Company from USA is taxable in India.
19 July 2011
But please clarify how the Indian company is PE of US Company.
Anuj
+91-9810106211
Anuj
+91-9810106211
20 July 2011
Say that the Indian Co. is a dependent agent of the USA Co. Then I guess it shall form a PE under article 5.
My confusion is while applying article 7 is it required that there should be a PE other than the 2 companies transacting? or even a transaction between a Co. & its PE (as detailed above) is sufficient to be made taxable in India?
My confusion is while applying article 7 is it required that there should be a PE other than the 2 companies transacting? or even a transaction between a Co. & its PE (as detailed above) is sufficient to be made taxable in India?
20 July 2011
In international taxation parlance a foreign company if earning BUSINESS INCOME shall be liable to tax in the source country(country where income is earned) only when the foreign Company has a PE in Source Country.
Here the Indian Agent is a PE of foreign company and based on relationship between Indian and foreign company the income attributable to Indian operations is taxable in India.
Anuj
+91-9810106211
femaquery@gmail.com
Here the Indian Agent is a PE of foreign company and based on relationship between Indian and foreign company the income attributable to Indian operations is taxable in India.
Anuj
+91-9810106211
femaquery@gmail.com
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