Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

August 9, 2024
2024-1519

PE Watch | Latest developments and trends, August 2024

PE domestic law

Australia's Pillar Two legislation clarifies the treatment of a Permanent Establishment

On 4 July 2024, the Australian Government introduced legislation to Parliament to implement Australia's adoption of Pillar Two. This followed a public consultation on exposure drafts (EDs) released in March 2024. After the EDs were published, the primary legislation underwent a brief public consultation process, which concluded in April 2024. Based on feedback from that consultation and additional work by the Treasury, certain changes were made to the Pillar Two legislation.

Among these changes, the treatment of a Permanent Establishment (PE) has been further clarified. For example, if the Main Entity in respect of a PE is a joint venture (JV) or a JV subsidiary, then any PEs of the Main Entity are considered JV subsidiaries of the JV. Also, if the Main Entity is an Excluded Entity, a PE in respect of that Main Entity is deemed to be an Excluded Entity.

See EY Global Tax Alert, Australian 15% global and domestic minimum taxes law introduced into Parliament, dated 11 July 2024.

Other PE developments

UAE releases guidance on exemption for foreign PEs

On 31 July 2024, the United Arab Emirates (UAE) issued the Corporate Tax Guide "Determination of Taxable Income." This Corporate Tax Guide includes a section on exemptions for foreign PEs. According to the guide, a Resident Person in the UAE can elect to exempt from corporate tax in the UAE income and associated expenses from foreign PEs, provided certain conditions are met. These conditions include not considering losses from any foreign PE and ensuring that the income and associated expenses are at arm's length.

The Corporate Tax Guide notes that the foreign PE must be treated as separate and independent enterprise and any transactions between the head office and the PE must be at market value.

Additionally, the Corporate Tax Guide requires that the income, expenses and losses of the foreign PE be subject to corporate tax, or a similar tax, at a rate of at least 9%.

Lastly, if a Resident Person has used a tax loss incurred in their foreign PE, that tax loss must be fully offset by the taxable income from the foreign PE in a subsequent tax period before the Resident Person can elect to apply the foreign-PE exemption.

* * * * * * * * * *
Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Belastingadviseurs LLP (Netherlands)

Ernst & Young Solutions LLP (Singapore)

Ernst & Young LLP (United States)

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more