Thailand Law Library

by Thailand Lawyer

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.

The term "permanent establishment" includes especially:

1. a place of management;
2. a branch;
3. an office;
4. a factory;
5. a workshop;
6. a warehouse, in relation to a person performing storage facilities for others; and
7. a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources.

The term "permanent establishment" likewise encompasses:

1. a building site, a construction, assembly or installation project or supervisory activities in connection therewith or an installation or drilling rig or ship used for the exploration or exploitation of natural resources, but only where such site, project or activities continue for a period or periods aggregating more than 120 days within any 12-month period; and
2. the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only if
1. activities of that nature continue (for the same or a connected project) within that State for a period or periods aggregating more than 90 days within any 12-month period, provided that a permanent establishment shall not exist in any taxable year in which such services are rendered in that State for a period or periods aggregating less than 30 days in that taxable year; or
3. the services are performed within that State for a related enterprise within the meaning of paragraph 1 of Article 9 (Associated Enterprises).

Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

1. the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;
2. the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
3. the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
4. the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
5. the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;
6. the maintenance of a fixed place of business solely for any combination of the activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include the use of facilities or the maintenance of a stock of good or merchandise belonging to the enterprise for the purpose of occasional delivery of such goods or merchandise.

Even if an enterprise does not have a permanent establishment in a Contracting State under the preceding paragraphs of this Article, nevertheless, it shall be deemed to have a permanent establishment in a Contracting State if it engages in business in that State through an agent who:

1. has an authority to conclude contracts in the name of that enterprise and regularly exercises that authority in that State unless the activities of that person are limited to those mentioned in paragraphs 4 and 5 which, if exercised through a fixed place of business, would not make the fixed place of business a permanent establishment under the provisions of that paragraph;
2. regularly secures orders in that State for that enterprise; or
3. maintains in that State a stock of goods or merchandise belonging to that enterprise from which he regularly makes deliveries on behalf of the enterprise.

An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

However, when by agreement between the agent and the enterprise, the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and other enterprises which are controlled by it or have a controlling interest in it, he will not be considered an agent of an independent status within the meaning of this paragraph.

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.