In my International Taxation class tomorrow (October 10th) we are going to discuss the  OECD’s “Unified Approach” released a day earlier on October 9, 2019.  Given the keen interest generated by digital taxation and the allocation of profits/losses generated therefrom, I thought it of interest to the Kluwer International Tax readers that I share my…

India recently notified a Protocol that amends the India-China tax treaty and incorporates some of the OECD recommendations put forth as part of its BEPS project. The changes would apply from the 2020 financial year. The Protocol brings about serious changes to the tax treaty in several areas, including limiting treaty abuse, tackling artificial avoidance…

While earthlings are grappling with taxation in a digitalised world, a new and important frontier has been opening up somewhat less observed. Commercial exploitation of space has become commonplace and plans for activity beyond our planet more ambitious. At the IFA Permanent Scientific Committee  we are always looking ahead to see where cutting-edge tax issues…

On 10 September Wolters Kluwer organized an interesting discussion on Permanent Establishments. The discussion was led by 3 panelists, Tamara Schwärzler (PwC Switzerland); Arvid A. Skaar (Norwegian lawyer, well known for his standard work on Permanent Establishments) and myself as editor of the Wolters Kluwer PE+ tool. Tamara kicked off the session by discussing Tax…

Globally, countries are making a concerted effort to rein in the direct tax challenges posed by the digital economy. Some of this work is directly inspired by the recommendations set out by the OECD as part of its 15-point Action Plan to tackle base erosion and profit shifting. The Indian government, too, introduced two key…

Almost every foreign client I have advised has at some stage told me how complex the Indian Income Tax Act is. And those who follow Indian tax jurisprudence closely know that judicial decisions, in many cases, are doubly complex. Recently, India’s Income Tax Appellate Tribunal (ITAT), New Delhi was asked to decide if the tax…

Can an Indian subsidiary be said to be the permanent establishment of its overseas parent on the ground that it is a virtual projection of the latter even if the tests explicitly stipulated in the permanent establishment Article of a tax treaty are not met? This was one of the main questions that recently came…

On July 13, 2018, India’s Central Board of Direct Taxes (CBDT) issued for stakeholders’ comments a consultation document on framing of tax rules in respect of the concept of “significant economic presence” – a recent addition to the Indian Income Tax jurisprudence. Readers will recollect that India’s 2018 Budget proposed to amend the definition of…

A recent decision of the Spanish Supreme Court, of February 26, 2018, in the civil law jurisdiction, may have an unexpected effect on the composition of the boards of directors of the Spanish subsidiaries of multinational groups. The practical effects for Spanish based groups with minority shareholders, where the role of directors is critical, could…

The Existing Framework: Nexus and Profit Attribution Rules Under the current Double Taxation Avoidance Agreement (DTAA) framework, business profits are in principle taxable in the State of residence of the enterprise. However, the source (market) jurisdictions may tax the profits if a permanent establishment (PE) is triggered therein. A PE arises when the non-resident operates…

The importance of the permanent establishment (PE) principle in tax treaties cannot be undermined. Whether or not a source country has the right to tax business profits of a foreign company would depend wholly on the existence or non-existence of a PE of that company in the source country. Work undertaken by the OECD in…

India’s Income Tax Appellate Tribunal, Bangalore on September 28, 2017, handed down a decision in which it noted that the profits of a foreign company based in Saudi Arabia cannot be taxed in India under the India-Saudi Arabia tax treaty because the company did not have a service permanent establishment (PE) in India. Under Article…

In March I blogged about the first OECD draft guidance on the allocation of profits to commissionaire and other PE’s.  Looking at the June OECD draft, further ideas have come up as to why the allocation of profits to absentees is not a good transfer pricing idea. I have great respect for the OECD’s work…

As widely reported, the signing ceremony of the Multilateral Convention to implement tax treaty related measures to prevent Base Erosion and Profit Shifting (“MLI”) took place on 7 June 2017, in Paris, with the participation of Ministers and other high-level political representatives from various countries around the world. Besides the United States, which from the…