This article is about an Advanced Ruling obtained by MasterCard Asia Pacific PTE. Ltd., a Singapore local company, which is engaged in 2 types of services:
1. Transaction Processing Services;
2. Payment Related Services pertaining to digital payment cards.
There exist a subsidiary company in India and that’s where begins the skepticism of establishment of a business connection in India. Factors taken into consideration for determining the existence of a PE in India in the ruling were as follows:
- The existence of the Service Agreement between the Parent Company & Indian Subsidiary Company and substance of the activities;
- Subsidiary as a Fixed Place of Business: service personnel, and premise of Indian Company are at disposal of the Parent Company Fixed Place PE;
- Though all the contracts/proposals are finalized by the Parent Company in Singapore, but they are routed through Indian Subsidiary Company, hence rendering it as a Dependent Agent PE of the Singapore Company;
- Activities undertaken, Assets used and Risk assumed by the Indian Subsidiary company for Indian Operations. Further how these deviated from the Contractual terms.
- Ownership of assets by Indian Company and the constitution of the assets forms the core business activities in India, but not restricted to preparatory & ancillary activities;
- The Mastercard Interface Processors (“MIP”) contained in the Network carry out significant activities such as PIN processing, validation of card codes, name and address verification, preliminary validation, etc. Network As A Fixed Place PE passing permanence test and control test.
- Visit of employees of the Parent Company exceeded 90 days in India and their activities in India constituted a Service PE.