n Stellenbosch Law Review = Stellenbosch Regstydskrif - E-commerce : a critique on the determination of a "permanent establishment" for income tax purposes from a South African perspective
|Article Title||E-commerce : a critique on the determination of a "permanent establishment" for income tax purposes from a South African perspective|
|© Publisher:||Juta Law Publishing|
|Journal||Stellenbosch Law Review = Stellenbosch Regstydskrif|
|Author||Annet Wanyana Oguttu and Sebo Tladi|
|Publication Date||Jan 2009|
|Pages||74 - 96|
When two countries have entered into a double taxation agreement, the profits of an enterprise of a contracting state are taxable only in that state. The other contracting state cannot tax those profits unless the enterprise carries on business in that state through a permanent establishment (PE) situated therein. The existence of a PE in the form of a "fixed place of business" or a "dependent agent" presupposes the existence of a tax presence.
The effective application of the PE concept, however, faces challenges when trade is conducted electronically. This is because with e-commerce, physical locations are not always required in foreign markets in order to engage in significant commercial activities. This article discusses the meaning of the PE concept, analyses the challenges e-commerce poses to this concept, and contains a recommendation for the effective taxation of income that electronic enterprises derive from foreign jurisdictions.
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