Permanent establishment – treaty definition clarified

The State Administration of Taxation issued a notice (Guo Shui Fa [2006] No.35) on 16 March 2006 clarifying that a permanent establishment (PE) as normally contained in Art. 5(1) of the tax treaties concluded by China (People's Rep.), refers to a fixed place of business through which the business of an enterprise is wholly or partly carried on. Art. 5(4) of such tax treaties provides that a PE does not include a fixed place of business through which preparatory or auxiliary activities are…