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India: Seconded employee did not create permanent establishment under tax treaty with Singapore

India: Seconded employee did not create PE

The Delhi Bench of the Income-tax Appellate Tribunal held that the secondment by a Singapore company of an employee to an Indian company did not give rise to a service permanent establishment (PE) in India, pursuant to the provisions of the income tax treaty between India and Singapore.


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The case is: Yum Restaurants (Asia) Pte. Ltd. (ITA No. 6018/Del/2012)

The tribunal found that the seconded person was an employee of the Indian company and that the Singapore-based company had simply acted as a conduit in paying the salary of the employee in Singapore, given the fact that the employee’s family was in Singapore. The amount of reimbursed salary was not subject to tax in India, the tribunal concluded.

The tribunal also held that there was not an agency PE on account of marketing activities carried out in India and that the pay to the seconded employee was not taxable in India as fees for technical service.

Read a July 2020 report [PDF 325 KB] prepared by the KPMG member firm in India

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