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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
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DT: Barbados: double taxation agreement, Article 6: Business profits

(1) The industrial or commercial profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on a trade or business in the other Contracting State through a permanent establishment situated therein. If it carries on a trade or business as aforesaid, tax may be imposed on those profits by that other State, but only on so much of them as is attributable to that permanent establishment.

(2) Where an enterprise of a Contracting State carries on a trade or business in the other Contracting State through a permanent establishment situated therein there shall in each Contracting State be attributed to that permanent establishment the industrial or commercial profits which it might be expected to make if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm’s length with the enterprise of which it is a permanent establishment.

(3) In determining the industrial or commercial profits of a permanent establishment, there shall be allowed as deductions all expenses of the enterprise which are incurred for the purposes of the permanent establishment, including executive and general administration expenses so incurred, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere (other than expenses which would not be deductible if the permanent establishment were a separate enterprise).

(4) No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

(5) Nothing in this Article shall apply to either Contracting State to prevent the operation in the State of any provisions of its law relating specifically to the taxation of any person who carries on a business of any form of insurance. Provided that if the law in force in either Contracting State at the date of signature of this Agreement relating to the taxation of such persons is varied (otherwise than in minor respects so as not to affect its general character, or by this Agreement), the Contracting Government’s shall consult with each other with a view to agreeing to such amendment of this paragraph as may be necessary.