Question 3

F Pte Ltd (FPL) is a company incorporated and tax resident in Singapore. It provides marketing and support services to both its local clients and overseas clients. FPL has two wholly-owned subsidiaries G Pte Ltd (GPL) and H Pte Ltd (HPL). GPL is a company incorporated and tax resident in Country G and HPL is a company incorporated and tax resident in Country H. Transaction 1 FPL and GPL During the financial year ended 31 December 2019, GPL required the technical expertise of FPL so that GPL would be able to better market its products to its customers in Country G. In doing so, two (2) FPLs engineers went to Country G once a month for a period of 8 months during the financial year ended 31 December 2019 and rendered the assistance to GPLs marketing team accordingly. Transaction 2 FPL and HPL During the financial year ended 31 December 2019, FPL has successfully concluded a marketing service contract with its major customer (XYZ) located in Country H. But this did not come without any hard work of HPL where the initial conversation was made between HPL and XYZ. Furthermore, HPL did the initial presentation of the business of the FPL Group of companies in XYZs office. However, the final round of discussion leading to the conclusion of the above contract was made between the Marketing Team of FPL and XYZ virtually. At all material times, none of FPLs employees or representatives travelled to Country H to meet with the XYZ Team to discuss this deal.

Both Country G and Country H have concluded Double Taxation Agreements with Singapore. You can assume that both agreements are identical to the 2017 OECD Model Tax Convention.

Required: (a) Apply the concept of permanent establishment (PE) in the tax treaty between Singapore and Country G and discuss whether the assistance by FPL to GPL would trigger any PE for FPL in Country G. Illustrate the ways in which FPL might consider mitigating the PE risks as identified above, where applicable. (15 marks)

(b) Apply the concept of PE in the tax treaty between Singapore and Country H and discuss whether the assistance by HPL on behalf of FPL would trigger any PE for FPL in Country H. Illustrate the ways in which PL might consider mitigating the PE risks as identified above, where applicable. (10 marks)