Tax Treaty Case Law around the Globe 2012
1. Aufl. 2013
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Kazakhstan: Allocation of Head Office Expenses to Permanent Establishments
Tomas Balco
11.1. Introduction
Two recent cases in Kazakhstan related to application of tax treaties dealt with the attribution of profits to a permanent establishment, and specifically with the complexities of the allocation of head office expenses of two international construction companies to their permanent establishments located in Kazakhstan.
These cases involved two construction companies – Halliburton International Inc. and KCA Deutag Drilling GmbH – which were both involved in providing services to the oil and gas industry in Kazakhstan. Both cases originated in the oil-rich western region of Kazakhstan, and are representative of the issues currently faced by multinational enterprises operating through permanent establishments in Kazakhstan.
The case of Halliburton v. Tax Department of Atyrau City (the Halliburton case) was decided by the Inter-regional Economic Court of the Atyrau Region in favour of tax authorities. The case of KCE Deutag Drilling GmbH v. Tax Department of Atyrau city (KCA Deutag) was decided by the Supreme S. 104Court in favour of taxpayer. As the cases have a similar fact pattern, they are...