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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 5

Permanent Establishment

(1) For the purposes of this Convention, the term "permanent establishment" means a fixed place of business in which the business of the enterprise is wholly or partly carried 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 farm or plantation;
  • (g) a mine, oil well, quarry or other place of extraction of natural resources;
  • (h) the performance of building, construction, installation, assembly, excavation, reclamation, dredging or clearing activities or other similar activities not covered in sub-paragraph (i), or supervisory activities connected therewith, either lasting more than 3 months within a 12-month period, or as part of a project which is carried out successively by different enterprises for a period exceeding in the aggregate 3 months within a 12-month period;
  • (i) the performance of construction, installation or assembly activities pertaining to machinery and industrial equipment, or supervisory activities connected therewith, either lasting more than 183 days within a 12-month period, or as part of activities successively performed by different enterprises for a period exceeding in the aggregate 183 days within a 12-month period;
  • (j) the rendering of services, including consultancy services, by an enterprise through an employee or other personnel where activities of that nature continue within one of the States for a period or periods exceeding in the aggregate 183 days within any 12-month period.

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

  • (a) the use of facilities solely for the purpose of storage or display 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 or display;
  • (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 advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

(4) A person acting in one of the States on behalf of an enterprise of the other State-other than agent of an independent status to whom paragraph 7 applies-shall be deemed to be a permanent establishment in the first-mentioned State if:

  • (a) he has, and habitually exercises in the first-mentioned State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or
  • (b) he maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders on behalf of the enterprise.

(5) An insurance enterprise of one of the States shall, except with regard to reinsurance, be deemed to have a permanent establishment in the other State if it collects premiums in the territory of that other State or insures risks therein through an employee or through a representative who is not an agent of an independent status within the meaning of paragraph 7.

(6) An enterprise of one of the States which carries out serial mapping and similar serial activities for the purpose of taking inventories of natural auxiliary wells in the other State shall be deemed to have a permanent establishment within that other State.

(7) An enterprise of one State shall not be deemed to have a permanent establishment in the other State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, where such a broker or agent carries out activities solely, or almost solely, for that enterprise itself or for that enterprise and other enterprises which are controlled by or have a controlling interest in it, he shall not be considered an agent of an independent status within the meaning of this paragraph.

(8) The fact that a company which is a resident of one of the States controls or is controlled by a company which is a resident of the other State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.