The Changing Face Of Service Permanent Establishments

INTRODUCTION

Broadly speaking, a Service permanent establishment ("P.E.") is an international tax concept under which services provided by a nonresident may give rise to a P.E. in the source country if the services are provided beyond a certain period of time. The concept was first inserted in the U.N. Model Tax Convention in 1980, and while tax authorities across the world remain split on whether a Service P.E. requires a fixed place of business in the source country, the Indian tax authorities recently introduced a new dimension that is further baffling the tax world.

IS "PHYSICAL PRESENCE OF EMPLOYEES" NO LONGER A PRECONDITION FOR IMPOSING TAX?

India Holds Physical Presence of Employees Not Required