Australian Tax Treaties

Korean Convention  

CONVENTION BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF THE REPUBLIC OF KOREA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME  

CHAPTER II - DEFINITIONS  

ARTICLE 5   Permanent Establishment  

(1)    
For the purposes of this Convention, the term " permanent establishment " means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

(2)    
The term " permanent establishment " includes especially -

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;

(g) land used for agricultural, pastoral or forestry purposes.

(3)    
A building site or a construction, installation or assembly project constitutes a permanent establishment only if it exists for more than six months.

(4)    
An enterprise shall not be deemed to have a permanent establishment merely by reason of one or more of the following -

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of activities which have a preparatory or auxiliary character for the enterprise, such as advertising or scientific research.

(5)    
An enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if -

(a) it carries on supervisory activities in that State for more than six months in connection with a building site, or a construction, installation or assembly project which is being undertaken in that State; or

(b) substantial equipment is being used in that State for more than twelve months by, for or under contract with the enterprise in exploration for, or the exploitation of, natural resources, or in activities connected with such exploration or exploitation.

(6)    
A person acting in a Contracting State on behalf of an enterprise of the other Contracting State - other than an agent of an independent status to whom paragraph (7) applies - shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if -

(a) he has, and habitually exercises in that State, an authority to conclude contracts binding the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or

(b) in so acting, he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise, provided that this provision shall apply only in relation to the goods or merchandise so manufactured or processed.

(7)    
An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that Contracting State through a broker, general commission agent or any other agent of an independent status, where that person is acting in the ordinary course of his business as such a broker or agent.

(8)    
The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

(9)    
The principles set forth in paragraphs (1) to (8) inclusive shall also be applied in determining for the purposes of paragraph (6) of Article 11 and paragraph (5) of Article 12 of this Convention whether an enterprise of a Contracting State has a permanent establishment outside both Contracting States, and whether an enterprise, not being an enterprise of either Contracting State, has a permanent establishment in a Contracting State.