Transfer Pricing Forum: Attribution of Profits to PEs

In the case of a turnkey contract for supply and installation,
commissioning and testing of large
equipment, e.g. power projects, involving both offshore
and onshore legs of work:

1. Do the Revenue Authorities of your country challenge
   the split of the contract between the offshore and onshore
   legs, for the purposes of attributing greater revenue
   to the onshore leg constituting ‘‘a fixed place of
   business installation PE’’ of the foreign company,
   even where the foreign company had entered into the
   contract with a rank third party customer?
2. If the title of the equipment, which is supplied offshore,
   passes to the customer in the local country
   only upon completion of testing or commissioning
   thereof to the satisfaction of the customer, do the Revenue
   Authorities of your country attribute the entire
   profits relating to such offshore supply to the ‘‘fixed
   place of business installation PE’’ of the foreign company
   in the local country or do they restrict the attribution
   to only the functions of testing or
   commissioning, which are actually carried out in the
   local country?

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