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ARTICLE 5

Permanent Establishment

(1) For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

(2) The term "permanent establishment" includes in particular:

  • (a) a place management;
  • (b) a branch;
  • (c) an office;
  • (d) a factory;
  • (e) a workshop;
  • (f) a mine, a petrol or gas well, a quarry or any other natural resource extraction place;
  • (g) a sales point;
  • (h) a warehouse accessible to a person to store goods and merchandise of another; and
  • (i) a farm or a plantation.

(3) The term "permanent establishment" also includes:

  • (a) a construction, assembly or monitoring site only if it is present from more than six months;
  • (b) the provisions of services by an enterprise, including consulting services, carried on through employees or other individuals hired by an enterprise for that purpose, but only as long as such activities continue to be carried on in the country for a period or periods which in the aggregate exceed two months during any 12 months period;
  • (c) an enterprise is considered as having a permanent establishment in a Contracting State to operate out its business if it provides services or equipments and location engines used in prospecting, extraction or exploitation of mineral oil in this State.

(4) Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not 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 of collecting information, for the enterprise;
  • (e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary nature;
  • (f) the maintenance of a fixed place of business solely for the purpose of carrying on any combination of activities mentioned in sub-paragraphs (a) through (e) of this paragraph, provided that the overall activity of the fixed place of business resulting from this combination of activities is of a preparatory or auxiliary nature.

(5) Notwithstanding the provisions of paragraphs (1) and (2) of this Article, where a person-other than an agent of independent status to whom paragraph (7) of this Article applies-acts on behalf of an enterprise, and has, and habitually exercises, in a Contracting State, the authority to conclude contracts on behalf of the enterprise, then that enterprise shall be deemed to have a permanent establishment in that Contracting State in respect of any activities which that person undertakes for the enterprise, if the said person:

  • (a) undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph (4) of this Article, which if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or
  • (b) not having this authority, it usually retains in one of the two Contracting States, a stock of goods or merchandise from which it regularly withdraws goods and merchandise for delivery purposes in the name of the enterprise.

(6) Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State, except in the case of reinsurance, shall be deemed to have a permanent establishment in the other Contracting State if it collects premiums or insures risks in that other State through a representative other than an agent of independent status to whom the provision of paragraph (7) of this Article applies.

(7) An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, a general commission agent or any other agent of independent status, provided that such persons are acting in the ordinary course of their business, and their commercial or financial relations with the said enterprise are not based or subject to terms accepted or imposed which are different from those that are generally agreed upon by independent agents. However, where the activities of such an agent is exercised wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between this enterprise and the agent in their commercial and financial relations which differ from those which would be made between two independent enterprises, then such an agent shall not be deemed to have an independent status under the provisions of this paragraph.

(8) The fact that an enterprise which is a resident of a Contracting State controls or is controlled by an enterprise which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself be sufficient to constitute either enterprise a permanent establishment of the other.