Companies may form a PE abroad either under a tax treaty or a local definition for Australian tax purposes. Below two matters are included under the draft ruling:
* Specific inclusions in the permanent establishment definition exist under domestic tax laws and Australian treaties, for example, existence of substantial equipment. Even if the word ‘permanent establishment’
* However, if an applicable tax treaty considers a company to carry out business activity through a PE, then such consideration would only be applicable for the tax treaty purpose (local tax law provisions would not be influenced by the same).
Based on the above points, domestic exemption for non-resident branch income is not applicable simply because the company has a Permanent Establishment abroad (subject to certain other provisions).
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Nair & Co., the leader in international business expansion services, provides accounting, HR, legal, tax and compliance services for the set up and management of your international operations. Our model of a single-point-
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