The concept of Permanent Establishment (‘PE’) occupies a crucial space in International Tax debates especially in the light of changing business models and adoption of technology. While the OECD has laid out guiding principles for evaluation of a PE, several Indian Courts and Tribunals have evolved their own tests taking into account facts and circumstances surrounding various commercial arrangements.
The Supreme Court of India has recently pronounced a much-anticipated landmark judgement in the case of Hyatt International South Asia Ltd. The Supreme Court has held that Hyatt International has a fixed place PE in India under India-UAE tax treaty on account of the strategic oversight services provided by it to hotel owner in India. The judgment highlights that functional control is a key criterion for establishing presence of PE, redefining the often applied ‘disposal test’.
This ruling can potentially send ripples beyond the hospitality sector, impacting all foreign multinational enterprises providing managerial support services in India. Also, apart from income-tax, the findings of Supreme Court can raise significant issues under the Goods and Services Tax law as well as FEMA.
we will unpack the key elements of the judgment, examine its alignment with international tax principles, and explore its legal and practical consequences under different laws. Among other things, we will address:
- Principles laid out in Hyatt judgement and core takeaways
- Alignment of the ruling with existing principles/tests laid out by courts/ commentaries on determination of PE
- Key challenges and way forward
- Potential impact under other laws (GST and FEMA)
- Interactive Q&A
Speakers -
- S. Vasudevan, Executive Partner
- Disha Bhandari, Partner
- Harshit Khurana, Associate Partner