CBDT COMMITTEE ON 'PROFIT ATTRIBUTION TO PERMANENT ESTABLISHMENT (PE) IN INDIA'

About: 

• The committee has proposed change in the methodology for taxing MNCs, including digital firms, having permanent establishment in India by giving weightage to factors like domestic sales, employee strength, assets and user base. 
  
  
• Key Recommendations: 
  • MNCs that are incurring global losses or a global profit margin of less than 2 % and have operations in India will be deemed to have made a profit of 2 % of Indian revenue or turnover and will be taxed accordingly. 
    
    
  • Sales, employees (manpower and wages) and assets in India of a multinational corporations (MNCs) should be taken into account for determining domestic tax liability. 
    
    
  • In case of digital companies, the weightage will be given to an additional fourth criteria of 'user' base. 
    
    
  • It provides different weightage for digital companies categorising them as "high" and "low or medium" user base with significant economic presence in India.
    
    
  
  
  
• Way ahead: It has invited comments from stakeholders on the report within 30 days.