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DOUBLE TAX AGREEMENT - Coggle Diagram
DOUBLE TAX AGREEMENT
Permanent establishment
Activity test
supervisory activities carried out in other territory which related to construction, installation/ assembly project, carried out >6m
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The buss profits of an enterprise only taxable in foreign country if enterprise carries on buss in foreign country through PE situated there. But only taxable on buss profits.
Agency test
habitually maintains stock of goods belonging to enterprise from which regularly fills order on behalf enterprise in territory
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Not PE
Independent agent not PE
if transaction btwn independent agent and enterprise were not made under arm's length conditions, not considered as independent agent
carry buss in other state through broker, general commission agent/any independent agent where such persons acting in ordinary course of buss
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keep facilities used solely for storage, display/delivery of goods
Advantages
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Withholding tax
modify application by
- lower rate
- giving complete exemption
Transfer pricing
contain specific rules to
- avoid conflict over TP issues
- avoid double taxation
Principles
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does not itself impose liability to tax, only domestic laws can impose
if there is conflict in provisions of DTA & domestic law, DTA applies
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