jaeography.blogg.se - Bram ramon price

Through the Transfer Pricing Regulation and the Country-by-Country Reporting Regulation, the Maldives – aligning its practices with the OECD’s Transfer Pricing Guidelines – implements the three tiers of transfer pricing documentation which require qualifying enterprises to prepare the Master File, the Local File, and Country-by-Country Reports. Within the past 12-months, the Maldives tax administration – Maldives Inland Revenue Authority – has published the Transfer Pricing Regulation, the Country-by-Country Reporting Regulation and the Advance Pricing Arrangement Regulation. With the commencement of the Income Tax Act in January 2020, the transfer pricing landscape has significantly changed in the Maldives. Muzammal Rasheed is Chief Executive Officer of Enfoque Consulting (Private) Limited, Pakistan, a member firm of WTS Global.īy Zaina Zahir (Senior Associate, CTL Strategies, Maldives) The amendments relating to CBO are not tested yet, however, the judgement may still apply insofar as it has been held that the definition of PE as per DTT supersedes the domestic law. In the context of attribution of profits to a PE, existing DTT does not contain any specific reference to the concept of CBO in Article 5.ĪTIR has addressed a key issue involved in the taxability of EPC/splitting of contracts under the Pakistan-China DTT. DTT override is applicable insofar as it provides for tax relief otherwise not available under the domestic law. In case of any conflict between domestic law and a DTT provision, the latter overrides the former.The concept of Cohesive Business Operations (CBO) introduced in domestic tax law, including related amendments in the definition of PE and source rules for business income and restriction on exemption from withholding tax, may affect the tax position prospectively, i.e.

The so-called force of attraction rule is not applicable for taxation of EPC contracts in view of the guidance provided under the UN MTC.

Tax authority was not authorized to discard the associated entity and treat Pakistani PE as the PE of offshore supplier for invoking force of attraction rule.

The requirement to obtain specific withholding tax exemption was inapplicable in case of payments for import of goods where title to goods is transferred outside Pakistan and supply is not made between associates.

Lastly, the tax authority maintained that the offshore contract is subject to tax in Pakistan as per DTT between Pakistan and China, which is based on the UN Model Tax Convention (UN MTC) and contains a ‘force of attraction’ rule.ĪTIR decided the appeal in favor of the taxpayer and relied on precedents involving DTTs with Germany and Italy to conclude that offshore supply contract/portion of composite contract cannot be subject to tax in Pakistan due to overriding effect of relevant DTTs. The tax authority inferred that the offshore supplier and onshore service provider, being PE of a separate company of the same group, must be considered a single entity for tax purposes.

The contract is essentially in the nature of an EPC contract and the location split of the EPC contract was made to avoid taxes due in Pakistan.

Both offshore and onshore agreements were similar in language and signed by the same person.

The supplier of machinery and the provider of onshore service were associates.

The taxpayer was held assessee-in-default due to the following facts: The onshore contract (construction, assembly and installation services) was signed separately with an associate of the equipment supplier, also resident in China and executed through a branch office registered in Pakistan, constituting a permanent establishment (PE). As per the facts, the appellant, a Pakistani renewable energy project, imported machinery and equipment from a Chinese manufacturer.

Recently, Pakistan’s Appellate Tribunal Inland Revenue (ATIR – second tier appeal forum) has allowed an appeal against the tax authority’s order for recovery of withholding tax, deductible while making payment for the offshore supply of machinery (ITA 377/KB/2019). The tax implications for these transactions are influenced by the design of the transaction in question and the provisions of the applicable Double Tax Treaties (DTTs). Engineering, procurement and construction (EPC) contracts and split contract arrangements (involving offshore supply contracts and onshore service contracts) have remained a key focus of Pakistani tax authorities.