Official Reply on Issues of Determining What Constitutes a Permanent Establishment of a Foreign Enterprise Providing Services in China and of the Attribution of the Profits Derived Thereby
关于外国企业在中国境内提供劳务活动常设机构判定及利润归属问题的批复
The Official Reply addresses queries from Provisional Office of the State Administration of Taxation on the definition of permanent establishments of foreign enterprise providing services in the PRC.
(Issued by the State Administration of Taxation on July 19 2006.):
(国家税务总局于二零零六年七月十九日发布。)
Guo Shui Han [2006] No.694
国税函 [2006] 694号
Jiangsu Provincial Office of the State Administration of Taxation:
江苏省国家税务局：
Your Request for Instructions on the Issue of the Attribution of the Profits of Permanent Establishments of Foreign Enterprises Providing Services in China (Su Guo Shui Fa [2006] No.104) has been received. We hereby clarify the issues raised in your document concerning the determination of permanent establishments and the attribution of the profits derived thereby as follows:
你局《关于外国企业提供劳务构成常设机构利润归属问题的请示》(苏国税发〔2006〕104号)收悉。现就文中所提有关常设机构判定及利润归属问题明确如下：
1. In actual practice, the provision in tax agreements on permanent establishments that specifies "the providing of services, including consultancy services, for the same project or affiliated project(s) by an enterprise of a Contracting State through employees or other engaged personnel in the other Contracting State, provided that such activities continue for a period or periods aggregating more than six months within any twelve-month period" means that if a foreign enterprise has not established an organization or premises in China, only assigning its employees to China to provide services, including consulting services, for relevant project(s), once the actual working hours in China of such employees continue for a period or periods aggregating more than six months within any twelve-month period, such enterprise may be deemed to have a permanent establishment in China.
一、 税收协定常设机构条款“缔约国一方企业通过雇员或其他人员，在缔约国另一方为同一项目或相关联的项目提供劳务，包括咨询劳务，仅以在任何十二个月中连续或累计超过六个月的为限”的规定，具体执行中是指，外国企业在中国境内未设立机构场所，仅派其雇员到中国境内为有关项目提供劳务，包括咨询劳务，当这些雇员在中国境内实际工作时间在任何十二个月中连续或累计超过六个月时，则可判定该外国企业在中国境内构成常设机构。
2. If a project lasts for several years and the employees of the foreign enterprise are assigned to China to provide services for only a certain period of time, and such period of time exceeds six months, while at other times during the project, persons are assigned to provide services in China for a period not exceeding six months, the foreign enterprise shall still be deemed to have a permanent establishment in China. Such permanent establishment shall be defined based on all the services provided for the relevant project(s) in China by such foreign enterprise, and not services only for a certain period of time.
二、 如果项目历经数年，而外国企业的雇员只在某一期间被派来华提供劳务，劳务时间超过六个月，而在项目其他时间内派人来华提供劳务未超过六个月的，仍应判定该外国企业在华构成常设机构。该常设机构是对该外国企业在我国境内为有关项目提供的所有劳务而言，而不是某一期间提供的劳务。
3. When the provision of services for a certain project in China by a foreign enterprise through its employees constitutes a permanent establishment, the profits derived from the services in China for the project shall be deemed profits of the permanent establishment and taxed as such.
clp reference:3210/06.07.19prc reference:国税函 [2006] 694号promulgated:2006-07-19三、 外国企业通过其雇员在中国境内为某项目提供劳务构成常设机构的，其源自有关项目境内劳务的利润应视为该常设机构的利润并征税。
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