Many states and countries, among them Argentina, use the concept of permanent establishment as a basis for determining their right to levy corporate income or sales taxes. The advent of e-commerce has made the issue of permanent establishment a very significant but complicated issue with regard to taxation policies. Therefore, the definition of permanent establishment is a key determinant for whether a country may or may not tax an online business.
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The concept of permanent establishment is of utmost importance specifically for taxing e-commerce. For taxing services provided via the Internet, the location where services are provided will be considered the place where the computer hosting the web page is physically situated, the place where the website owner is physically located, or the physical place where the person hiring the respective service is located.
According to the Article 12 of Argentina’s Income Tax Law, profits or benefits obtained from fees or other payments originating from technical, financial or other services rendered from abroad are deemed to be Argentinean and consequently are taxable. Those utilizing such services should withhold tax on full price that they paid by them taking into account the profit assumptions established by the law.
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Staff Attorneys, IBLS Editorial Board