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These notes are issued for the information of taxpayers and their tax - page 21 / 68

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The place where preparatory or auxiliary activities are conducted

44.

In defining a permanent establishment,

the Comprehensive

Arrangement excludes a fixed place of business whose activities, for the enterprise, are purely of a preparatory or auxiliary character. This is because such activities, even if carried on through a fixed place of business, are of a preparatory or auxiliary character and do not themselves directly generate

profits.

45.

Paragraph 4 of Article 5 lists various activities of a preparatory or

auxiliary character that may be carried out for the enterprise without

constituting a permanent establishment.

They include:

  • (1)

    the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

  • (2)

    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

  • (3)

    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

  • (4)

    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;

  • (5)

    the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

  • (6)

    the maintenance of a fixed place of business solely for any combination of the activities mentioned in subparagraphs (1) to (5) above, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

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