Issue 102 - August 2010
Sentiment
I hope all our readers are enjoying an exceptional summer with family interests taking over from work. And perhaps the last thing you want to receive is a newsletter analysing technical issues which do not necessarily need to be thought about when the sun is shining. But maybe it is useful to take a half hour respite in the shade and allow this month’s topic to permeate your relaxed brain so that you can avoid nasty tax surprises leaping out at you when the weather turns.
Indeed, the question that I am being asked consistently by clients is whether they have a taxable presence in another country as a result of their business activities. It makes no sense to find out years later that the local tax authority has decided to raise an assessment based on such a taxable presence which could totally negate the benefits of any corporate structure created. Even worse is the potential double taxation which could arise, and which could be avoided with a better understanding of what constitutes a taxable presence in another country.
I did write about the concept of permanent establishments in our December 2009 newsletter but make no apology for repeating much of that material within this comprehensive article which our new colleague, Dmitry Zapol, has written. Dmitry, who has joined IFS as from the beginning of this month, is a Russian lawyer who spent several years working at Barshevsky & Partners in Moscow before coming to the UK to embark on an international tax planning course. It was while he was a student of mine at the Institute of Advanced Legal Studies MA course on International Taxation that I became aware of his competency in understanding the commercial, legal and tax issues of client requirements, and I look forward to introducing him to you at future meetings.
In the meantime, in addition to the issues raised in the December newsletter, Dmitry has included relevant legislative and juridical information provided by contributing authors to our new book (with the same title), the 2010 edition of “International Tax Systems and Planning Techniques” or ITSAPT. This is being published by Sweet & Maxwell in September 2010 and will be available (at a discounted price) at our Conference at the Landmark Hotel in London on 28th October.
Dmitry has used the case study of ITSAPT as the basis for this month’s article. As I have explained in other emails, the ITSAPT Conference analyses the development of the Polycon Group into a worldwide conglomerate, exploring the tax issues arising at each stage of the group’s development. Clearly, the permanent establishment concept is just one of the issues which will be relevant during the planning of the growth of Polycon into a multinational group, and the contributing authors to ITSAPT will be discussing at the ITSAPT Conference how these various issues are interpreted by the tax administrations of their particular country.
I hope that you enjoy reading this, and would welcome any comments that you have (click here). Also, in the event that you would like further information about the Conference, please click here.
