| *Business profits* (Article 7) *OECD MC/ UN MC* : BPs of an Enterprise can only be taxed by the *Residence State (RS)*. Right of Source State (SS) to tax BPs of an enterprise only exists if a PE exists in its jurisdiction In *OECD MC*-Once a PE is proven the SS can tax only such profits as are attributable to the PE In *UN MC*- The attribution principle is amplified by a limited *FORCE OF ATTRACTION RULE (FOA)* The FOA rule implies that when a foreign enterprise sets up a PE in SS, it brings itself within the fiscal jurisdiction of that State to such a degree that profits that the Enterprise derives therefrom, whether through the PE or not can be taxed by it (i.e., the SS) Accordingly, if the Enterprise carries on business in the other CS through a PE, the profits of the Enterprise may be taxed in the other CS but only so much of them as is attributable to: That PE;Sales in other CS of goods or merchandise of the same or similar kind as those sold through that PE; orOther business activities carried on in that other State of the same or similar kind as those effected through that PE Series continue…… For daily updates, you may join: 1. FEMA & International taxation https://chat.whatsapp.com/J3O8lXBnYzdLnWmql7cBVG 2 *YouTube Link https://www.youtube.com/channel/UCtgyAk11-4JfHh1mHDyZ5bg 3. Telegram Channel Link t.me/FEMAANDINTERNATIONALTAXATION |
*Model Tax Conventions Series* *KP 6 (21-07-2020)* Chapter III: Taxation of Income *Business profits* (Article 7)
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