Indian subsidiary not permanent establishment under India-Saudi Arabia income tax treaty:
The Authority for Advance Rulings (AAR) found that the Indian subsidiary did not constitute a fixed place permanent establishment (PE) in India under Article 5(1) of the India-Saudi Arabia income tax treaty because the taxpayer (applicant) was not carrying on its main business from the premises of its subsidiary and the fixed place was not available to the foreign company at its disposal. The foreign company’s services were in the nature of support services. Further, the AAR found that the activities of the Indian subsidiary were duly compensated on an arm’s length basis in accordance with the transfer pricing regulations. The case is: Saudi Arabian Oil Company.
Read a June 2018 report [PDF 667 KB]