Branch tax

Tax Glossary Definition

Branch tax

Branch Tax – A tax charged on the profits earned by a branch or permanent establishment of a foreign enterprise within a particular country. Its purpose is to ensure that profits arising from business activities conducted locally are subject to domestic taxation, even though the branch forms part of the foreign company and lacks separate legal status. Example: If a U.S. corporation operates a branch office in India, the profits attributable to that branch may be taxed in India under branch profit tax provisions.

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