Question

Which of the following would qualify as a permanent establishment for income tax treaty purposes?

Question 37 options:

A)

Maintenance of a sales office in the host country.

B)

Shipment of goods by the foreign corporation to customers in the host country.

C)

The presence of corporate employees in the host country for a limited time period.

D)

All of the above would qualify as a permanent establishment.

Answer 1

Answer

Option A

Maintenance of a sales office in the host country

From a domestic law perspective, Permanent Establishment is defined under Indian Income Tax Act as a fixed place of business where the business of the enterprise is wholly or partly carried on that indicates business connection between the FC and the IC.The permanent establishment concept is important because it distinguishes between enterprises that are trading with a country and those trading within a country.