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Despite the long history of the Permanent Establishment (“PE”) concept, the practical application to the offshore oil and gas industry continues to raise a number of issues and disputes between taxpayers and tax authorities. In this article, Szymon Wlazlowski considers the key PE risks created by common activities performed under each of the four phases of the asset life cycle.


Phase 1: Licensing

(A) Set up representative office or a branch to perform market research, coordination and other “non-income” activities, pre declaration of commerciality

(B) Undertake or sign joint studies/reconnaissance contracts with other companies to allow for surveys (e.g. geophysical). This typically straddles declaration of commerciality