Cross-border tax terms — P

Each entry answers two questions — what the term picks out, and what changes once it applies. Neither answer needs a number, and a number in a definition tends to outlive its accuracy.

Cross-border vocabulary is mostly a record of disagreement. Two countries look at one arrangement and classify it differently, and the gap between the classifications is where the double tax, or the unintended relief, actually lives. Each term page therefore says what the word means, why it bites, and which of our pages it actually changes.

If a term like this is in a notice you have received, bring the notice. The definition matters far less than what the sender is actually asking for. Every page here carries the name of the person who reviewed it and the date they did.

• Part-year resident — Someone resident for only part of a tax year.
• Physical presence test — One of the two US qualifying tests for the exclusion, satisfied by days of presence in a foreign country during a twelve-month period.
• Principal purpose test — An anti-abuse rule denying a treaty benefit where obtaining it was a principal purpose of an arrangement, unless granting it accords with the treaty's object.
• Part XIII tax — Canada's flat withholding on passive payments to non-residents — rent, dividends, interest, pensions, royalties — which a treaty may reduce if the eligibility declaration is on file.
• PFIC — A passive foreign investment company — most commonly a non-US mutual fund or pooled investment.
• Protective return — A return filed to preserve deductions and treaty positions where the filer's conclusion is that no tax is owed.
• Profit split — A method dividing combined profit by reference to the parties' relative contributions, used where both sides make unique and valuable contributions.
• Profit level indicator — The ratio used to measure the tested party's profitability — an operating margin, a return on costs or a return on assets, chosen to fit its functions.
• Permanent establishment — The threshold at which a foreign enterprise's business profits become taxable locally.
• Preparatory or auxiliary — The carve-out that keeps genuinely supporting activity from creating a permanent establishment.
• Profit attribution — The exercise of determining how much profit belongs to a permanent establishment, treating it as if it dealt at arm's length with the rest of the enterprise.
• Place of effective management — The place where key management and commercial decisions are in substance made, which can make a foreign-incorporated company resident in another country.
• Paid-up capital — The tax-recognised capital of a corporation, which determines how much can be returned to shareholders without a deemed distribution.
• Pillar Two — The global minimum tax rules, which compute a group's effective tax rate jurisdiction by jurisdiction from adjusted accounting data no existing return produces.
• Portability — The election allowing a deceased US spouse's unused exemption to be used by the survivor.
• Pipeline planning — A post-mortem strategy addressing the double inclusion that arises when shares are taxed on death and again on distribution, executed inside a defined window.
• Place of supply — The rules deciding which jurisdiction taxes a supply and at what rate.
• Personal services business — A corporation that is in substance an incorporated employee, taxed punitively with most deductions denied.
• PAN — India's permanent account number — the identifier every Indian filing, refund and treaty claim depends on, and the first bottleneck in an NRI file.
• Presumptive taxation — An Indian scheme deeming profit as a percentage of turnover instead of computing it from books, with eligibility conditions and multi-year consequences.
• Published fee — A fee listed on this site for a defined scope, so the number is known before the first call.
• Protective filing — A filing made to preserve a right — a deduction, a treaty position, a refund window — where the conclusion is that no tax is owed.

What the P entries have in common

22 terms begin with P. What the entry under this letter turns on is set out on its own page, together with the returns it reaches and what we charge to handle them. Three to start with: Part-year resident, Physical presence test and Principal purpose test.

Nearby letters

O — 4 terms · Q — 3 terms. The full A–Z lists all 297 terms in one place.

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