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TAX & FINANCE: The OECD addresses permanent establishment and residency issues due to COVID-19
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The OECD addresses permanent establishment
and residency issues due to COVID-19
OECD解析新冠疫情下常设机构和税收居民身份的认定
By Kelvin Lee, PWC

BT 202006 FINANCE 01On April 3, 2020, the Organisation for Economic Co-operation and Development (OECD) published an analysis entitled “OECD Secretariat Analysis of Tax Treaties and the Impact of the COVID-19 Crisis” (OECD Analysis). The OECD Analysis provides guidance on cross-border tax issues arising from the COVID-19 pandemic based on an analysis of the current international tax treaty rules. These issues include whether a temporary change of work location of individuals in light of travel restrictions and various quarantine measures implemented by governments would lead to creation of permanent establishment (PE) or change in the tax residence status of the relevant corporations or individuals.
 

This News Flash summarises the OECD Analysis and discusses the potential tax implications that both Chinese and foreign enterprises and individuals should be aware of if they have to temporarily perform business activities or render employment services in another jurisdiction due to special working arrangement as a result of COVID-19.
 

新冠疫情期间,各国政府实施的出行限制及各种隔离措施,可能造成个人工作地点的临时变化,这些变化是否会带来常设机构或个人、企业税收居民身份认定的相关风险?2020年4月3日,经济合作与发展组织(OECD)发布《OECD秘书处分析报告:税收协定与新型冠状病毒肺炎疫情产生的影响》(以下简称“OECD报告”),结合国际税收协定条款分析了新冠疫情全球流行可能引发的跨境税收问题。
 

在本期,我们将介绍OECD报告的主要内容,分析新冠疫情期间境外个人在中国境内意外滞留、以及中国企业和个人“走出去”可能需要思考的税务影响及对策。
 

The OECD Analysis

OECD报告主要内容

The OECD Analysis provides guidance on the application of international tax treaty rules in the following four areas:
 

OECD报告从四个方面分析了疫情期间国际税收协定规则的适用:

BT 202006 FINANCE 021. The creation of PE

•Fixed place PE – The exceptional and temporary change of the location where employees exercise their employment because of the COVID-19 pandemic, such as working from home or in a jurisdiction other than the one in which they regularly work, should not create a PE for the employer. This is because a PE must have certain degree of permanency and be at the disposal of an enterprise in order for that place to be considered a fixed place of business through which the business of that enterprise is wholly or partly carried on.
 

•Dependent agent PE – Employees or agents working temporarily from home and concluding contracts in their home jurisdictions on behalf of their non-resident employers or principals for a short period of time (rather than as the normal routine) because of force majeure and/or government directives are unlikely to be regarded as “habitually concludes contracts on behalf of the enterprise” and therefore should not create an agency PE for the enterprises.
 

•Construction site PE – On the other hand, the period of temporary interruption of activities on a construction site (e.g. due to a shortage of material or labour difficulties) should be included in determining the duration of the site for the purpose of ascertaining whether the site constitutes a PE. In other words, temporary interruption of activities on a construction site due to COVID-19 should not be excluded.
 

1.常设机构的认定

•固定场所常设机构:因新冠疫情导致员工工作地点突发性、临时性变更的(例如在平时工作场所以外的其他税收管辖区内办公,包括居家办公等),不应视为员工所受雇的企业在该税收管辖区构成常设机构。通常,固定场所常设机构应具有一定程度的持续性,并且由企业控制,企业通过该固定场所,开展全部或部分企业业务。因此,不应单纯由于疫情带来的工作场所变化而判定构成固定场所常设机构。
 

•非独立代理人常设机构:因不可抗力或政府规定,境外企业员工或代理人短期内(非日常)临时在家办公并在其居住地税收管辖区代表其非居民雇主或委托人订立合同,不应视为“经常行使权力以企业的名义签订合同”,因此也不应视作企业在该税收管辖区构成代理人常设机构。
 

•建筑工程型常设机构:在计算建筑工程的持续时间时,应包括由于材料或劳动力短缺等原因导致中途停顿作业的时间,以确定该建筑工程项目是否构成常设机构。换言之,不应剔除由于新冠疫情导致的临时停工时间。

BT 202006 FINANCE 032. The residence status (place of effective management) of a company

Temporary relocation or inability to travel of chief executive officers or other senior executives of an entity should not trigger a change in the tax residency (place of effective management) of the entity under a tax treaty or create the issue of dual residency, especially when the tie breaker rule for dual residency in tax treaties is applied. Under the existing tie-breaker rule, the place of effective management will be used to determine the residence of a dual-resident entity for tax treaty purpose. The OECD analysis points out that all relevant facts and circumstances should be considered to determine the “usual” and “ordinary” place of effective management and not only those facts and circumstances that pertain to an exceptional and temporary period.
 

2.企业税收居民身份(或实际管理机构所在地)的认定

在适用税收协定判定企业的税收居民身份,特别是运用“加比规则”时,不应仅仅由于企业首席执行官或其他高管无法出行或暂时异地办公,而判定企业的税收居民身份(或实际管理机构所在地)发生变化,这也不应导致企业获得双重税收居民身份。根据目前大多数协定中的“加比规则”,当企业同时为两个税收管辖区的居民时,应认定其是“实际管理机构”所在国的居民。OECD报告指出,应通盘考量整体相关事实,以判定“惯例”、“通常情况”下的实际管理机构所在地,而不是仅考虑突发性、临时性的情况。
 

3. The residence status of individuals

A temporary dislocation of an individual by reason of the COVID-19 pandemic will unlikely change the individual’s tax residency when the tie-breaker rules for dual residency in tax treaties are applied.
 

3. 个人税收居民身份的认定

如果能够适用税收协定中解决双重税收居民身份问题的“加比规则”,即使个人受疫情影响暂时在异地居住,其税收居民身份一般来说也不应当改变。

BT 202006 FINANCE 04

4. Subsidised employment income of temporarily dislocated cross-border workers

The OECD takes the view that the employment income of a cross-border worker (i.e. an individual who is a resident of one state but commute to work in another state) who is temporarily dislocated and working in his/her state of residence but with his/her salaries subsidised by the government in the country of the employer (i.e. the state of source) should be attributable to the place where the employment used to be exercised by that individual before the COVID-19, as the employment income in such scenario most closely resemble a termination payment. As such, the state of source should have taxing right over such subsidised employment income.
 

4. 受雇地与居住地不一致的员工取得受雇补贴何处征税

疫情期间,一些跨境受雇人员由于暂时无法前往受雇地(即来源地)而在其家中(即居民地)办公,其取得雇主所在地政府(即来源地)发放的受雇补贴,应在来源地还是居民地征税?OECD报告认为,应由疫情爆发前的工作地(即来源地)征税。在这种情况下,受雇补贴的性质类似于离职补偿,因此来源地应对这类收入拥有征税权。
 

Observations

普华永道观察

BT 202006 FINANCE 07•The OECD Analysis does not contain any new rules or changes of the existing rules under the OECD Model Tax Convention. It simply provides an analysis of how the existing OECD rules and commentaries on applying a tax treaty should be interpreted in the exceptional COVID-19 context. In addition, the OECD Analysis only deals with corporate/individual residency issues and allocation of taxing rights between contracting parties in a tax treaty context. The domestic law of the relevant jurisdictions will apply if there is no tax treaty.
 

•The OECD Analysis only represents the OECD’s views, although it is influential, it is not legally binding on tax authorities of various jurisdictions. It is up to various jurisdictions to decide whether to follow these views in applying the tax treaties.
 

•Other than the OECD, a number of countries such as Australia, Ireland and the UK have also issued their own guidance and/or relief measures to address potential double taxation or unintended tax exposure due to exceptional and temporarily changes in working arrangement as a result of the COVID-19 situation. In Hong Kong, the Inland Revenue Department will generally follow the OECD's views and commentaries in interpreting and applying tax treaties unless they are contrary to the provisions in the Inland Revenue Ordinance.
 

•The OECD Analysis does not discuss Service PE as it is not included in the OECD Model Tax Convention. Generally, the period of temporary dislocation of workers after a project is concluded should be excluded in determining the duration of the project. However, it is not yet clear whether the period of temporary interruption and inability to render service in light of travel restrictions and quarantine measures due to COVID-19 during the project can be excluded.
 

•The OECD Analysis will not affect the tax reporting or filing obligations under the domestic law of a given jurisdiction. That is, enterprises and individuals should be mindful that even if they are entitled to a PE protection or employment income exemption in a given jurisdiction under the applicable tax treaty, their unintended presence or activities in that jurisdiction may trigger certain tax reporting or filing obligations under the domestic law of that jurisdiction. In addition, enterprises should keep sufficient supporting document as evidence of exceptional and temporary changes in working arrangement during the COVID-19 pandemic.
 

•报告并未改动OECD税收协定范本条款,仅就新冠疫情下现有协定范本和注释如何适用进行了解读。且报告仅讨论了税收协定中,企业和个人的税收居民身份认定及双方征税权的划分问题。当两国间未签订税收协定时,仍应适用各自国内法规。

•报告仅代表OECD的观点,虽然具有一定影响力,但对各国税务机关并无法律约束力。在适用税收协定时,是否遵循报告中的观点取决于各国税务机关。
 

•除OECD外,澳大利亚、爱尔兰和英国等也发布了指导性文件或减免措施,以解决新冠疫情下工作安排的突发性、临时性变更可能导致的双重征税及其他跨境税收问题。此外,我们也了解到,香港特别行政区税务局也表示,在解释和适用协定条款时,一般会遵从OECD报告及范本注释中的观点,除非与香港税收法规规定明显不一致。
 

•由于OECD税收协定范本不涉及劳务型常设机构,因此报告只分析了固定场所常设机构、建筑工程型常设机构、非独立代理人常设机构。一般来说,在计算劳务型常设机构的持续时间时,主要考虑为项目提供劳务的时间,项目完成后滞留在异地的时间不应该考虑在内,但对于项目中途因疫情滞留,且因隔离或出行限制等因素而无法提供劳务的时间,是否需要计算在内尚不清楚。
 

•须注意的是,即使在某地并未构成常设机构或可以享受免税协定待遇,企业及个人在该地的活动仍有可能触发程序方面的报告或申报义务。而且疫情期间,企业更应留存充分的资料以证明高管、员工由于疫情原因造成突发性、临时性异地办公。
 

The takeaway

注意要点

BT 202006 FINANCE 06We welcome the OECD Analysis as it provides influential and useful (though not legally binding) guidance on interpreting the international tax treaty rules in this extraordinary occasion. In China, no specific rules have been released by the tax authorities regarding the PE and tax residency issues arising from the COVID-19 pandemic at this time. According to our experience, if taxpayers and the tax authorities have disputes over such cross-border issues, both sides can refer to OECD’s views and international practices in their further discussions.
 

In addition, non-resident enterprises with no PE and hence no Corporate Income Tax (CIT) liability in China should still follow the “self-assessment and claim" mechanism stipulated in the Administrative Measures on Non-resident Taxpayers Claiming Tax Treaty Benefits to enjoy treaty benefits. They are still required to file the Reporting Form for Non-resident Taxpayers Claiming Tax Treaty Benefits, as well as relevant CIT returns, and retain relevant supporting documents including the Tax Resident Certificate for post-filing inspection. This equally applies to individuals. We suggest non-resident enterprises and individuals carefully assess the tax implications of temporary dislocation of business activities or working arrangement in China because of the COVID-19 pandemic, and seek tax authorities’ views regarding PE and tax residency to ensure that the treaty benefits are available, and reduce the potential risk in the post-filing administration process.
 

On the other hand, Chinese enterprises going abroad should also pay attention to the source jurisdictions’ announcement on corporate/individual residency issues, PE creation and taxing rights allocation during this exceptional period, and manage their overseas PE risk and other potential tax risks.
 

虽然这份OECD报告不具有法律效力,但仍具有一定程度的影响力,对于特殊情形下国际税收协定条款的适用能够起到指导性作用。目前,中国税务机关暂未针对新冠疫情引发的常设机构或个人、企业税收居民身份认定相关问题进行明确规定。若存在意见分歧,根据以往的实践,税企双方仍有机会进一步探讨参考OECD的观点和国际惯例的可能性。
 

此外,尽管非居民企业在中国没有构成常设机构的,无须缴纳中国企业所得税,但仍应按照《非居民纳税人享受协定待遇管理办法》,“自行判断、申报享受、相关资料留存备查”,包括填报《非居民纳税人享受协定待遇信息报告表》以及相关纳税申报表,并留存税收居民身份证明等相关资料备查。个人也有类似的申报表需要填列。建议非居民企业和个人均应仔细评估其境内的商业活动或因新冠疫情而在境内意外滞留的具体情形,并与税务机关保持充分沟通,确认税收居民身份、常设机构的认定,以确保充分享受税收协定待遇,同时降低后续监管过程中的税务风险。
 

中国走出去企业则需要关注特殊时期,各国就税收居民身份、常设机构的认定,以及征税权划分问题的解释,管控好境外常设机构及其他税务风险。

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