Author: Kunal Arora & Arushi Puri, ASA
In this growing era of digitalisation, businesses operate seamlessly across borders, relying heavily on technology and remote operations. While countries have entered into bilateral tax treaties to determine the taxable presence of entities operating across borders and ensure a fair distribution of tax revenues, companies have strategically leveraged their digital presence to generate substantial revenue in countries with low tax rates, minimizing tax liabilities. This gradual shift towards the digital economy has led to a host of new challenges and raised important questions about how traditional international tax laws may struggle to keep pace with how these companies operate. Consequently, this has prompted proposals to redefine the idea of what constitutes a taxable presence in a foreign country in such a world, including the introduction of Virtual Permanent Establishment.
Published on – Taxsutra
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