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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
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DT: Thailand: double taxation agreement, Article 5: Permanent Establishment

(1) For the purposes of this Convention, the term `permanent establishment` means afixed place of business in which the business of the enterprise is wholly or partlycarried on.

(2) The term `permanent establishment` shall include especially:

(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a warehouse, in relation to a person providing storage facilities for others;
(g) a mine, oil well, quarry or other place of extraction of natural resources;
(h) a building site or construction or assembly project which exists for more than six months.

(3) The term `permanent establishment` shall not be deemed to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

(4) An enterprise of a Contracting State shall be deemed to have a permanentestablishment in the other Contracting State if it carries on the activities of providingthe services within that other Contracting State of public entertainers or athletesreferred to in Article 18.

(5) A person acting in a Contracting State on behalf of an enterprise of the otherContracting State–other than a broker, general commission agent or any other agent of anindependent status to whom paragraph (6) applies–shall be deemed to be a permanentestablishment in the first-mentioned State, but only if:

(a) he has and habitually exercises in the first-mentioned State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or
(b) he habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders or makes deliveries on behalf of the enterprise; or
(c) he habitually secures orders for the sale of goods or merchandise in the firstmentioned State exclusively or almost exclusively on behalf of the enterprise itself or on behalf of the enterprise and other enterprises controlled by it or which have a controlling interest in it.

(6) An enterprise of a Contracting State shall not be deemed to have a permanentestablishment in the other Contracting State merely because it transacts business througha broker, general commission agent or any other agent of an independent status in theother Contracting State, where such persons are acting in the ordinary course of theirbusiness. For this purpose, an agent shall not be considered to be an agent of anindependent status if it acts as an agent exclusively or almost exclusively for theenterprise and carries on any of the activities described in paragraph (5) of thisArticle.

(7) The fact that a company which is a resident of a Contracting State controls or iscontrolled by a company which is a resident of the other Contracting State, or whichcarries on business in that other State (whether through a permanent establishment orotherwise), shall not of itself constitute either company a permanent establishment of theother.