51²è¹Ý

A permanent establishment (PE) of an entity (the ‘main entity’) is a place of business of the main entity that is located in a different territory than the main entity, and meets one of the following four conditions:

1. The place of business is situated in a territory where it is treated as a PE in accordance with an applicable tax treaty, and the territory taxes the income attributable to it in accordance with a provision similar to Article 7 of the OECD Model Tax Convention.
2. The place of business is in a territory where there is no such applicable tax treaty in force, but the territory, under its domestic law, taxes the income attributable to the place of business on a net basis similar to the manner in which it taxes its own residents.
3. The place of business is in a territory which has no corporate income tax, but if the territory did have such a tax, it would have the right to tax the income attributable to the place of business in accordance with Article 7 of the OECD Model Tax Convention, and the place of business would be treated as a permanent establishment in accordance with the Model Tax Convention.
4. None of the above conditions are met, and the territory of the main entity exempts the income attributable to the operations of the place of business.

For MTT purposes, a PE is treated as a distinct entity from the main entity.

This is set out in section 232 of Finance (No.2) Act 2023.

Place of business

‘Place of business’ takes the same meaning as it does in the OECD Model Tax Convention. It includes a deemed place of business for the purpose of the Model Tax Convention, a tax treaty, or the domestic law of a territory.