Summary: 1. Indian case: Poompuhar Shipping Corporation • Madras High Court • Time charter: legal and actual possession of ship retained by non-resident ship owner • Article 12 definition of "royalties": payment for the use of, or the right to use, equipment? - OECD: no - Court: yes (right of commercial exploitation) • Is a ship "equipment"? - Court: yes • Article 5(1) PE at the berths leased by the Indian charterer - However, charter fees are not attributable to such PE • Bare boat charter, with purchase option - Charter fees are "royalties" under Article 12 definition For information: K.R. Sekar (Bangalore): krsekar@deloitte.com 2. Australia • Interest paid to U.S. LLC - "Interpretative decision" issued by Australian Tax Authorities (ATO) - Payment of interest to U.S. LLC (disregarded entity for U.S. tax purposes), 100% owned by U.S. corporation - Australia / U.S. treaty: will Australian interest withholding tax be reduced under treaty? + ATO: yes, despite the absence of a general “hybrid entity” provision in treaty + Reasons: (1) "purposive" interpretation, and (2) consistent with the principles of OECD’s partnerships report - For information: David Watkins (Sydney): dwatkins@deloitte.com.au • New government's "clearance" of measures announced by former government - Former government left backlog of 96 measures - New government announces plan in regard to backlog - To obtain our report: www.deloitte.com/ap/dbriefs/bytes 3. UN • UN Committee of Tax Experts: 2013 annual meeting • China and India argue that Article 5(3)(b) (“furnishing of services” PE) does not require any physical presence in source country • Rejected by majority of UN Committee • Consequence of argument made by China and India: there would be a deemed PE for digital services, under the existing Article 5(3)(b) 4. India • Cyprus - India has issued a notification that Cyprus is a "non-cooperative jurisdiction" - Consequences + Transfer pricing rules + Minimum 30% withholding tax + Non-deductibility of payments, unless some conditions are satisfied + Deemed taxable income for receipts, unless satisfactory explanation - For information: Vijay Dhingra (Mumbai): vdhingra@deloitte.com Enwright De Sales (Hong Kong): ejdesales@deloitte.com Rohan Solapurkar (Singapore): rohans@deloitte.com • IBM - USD860 million assessment 5. In brief • Treaties - Ireland / Thailand - Vietnam / Palestinian Autonomous Areas • China: TP assessment (USD18 million) issued to pharmaceutical company • Vietnam: Draft circular on treaty shopping (based on China's Circular 601 and Indonesia's Regulation 62) - For information: Tom McClelland (Ho Chi Minh City): tmcclelland@deloitte.com • Japan: Annual report on APAs and MAP • Indonesia: Contract void because not in Bahasa Indonesian language
