Taking Stock – Einstein writes Indian tax law.

TS has for some time been worrying over the vexed issue of the point of taxation in the e-world, particularly what constitutes a ‘permanent establishment’. However, the Indian authorities have come up with a solution justified by Einstein’s theory of relativity.

A recent ruling concerned whether the activities of a US corporation that provided services to Indian clients through its US-based server was a permanent establishment in India.

According to the Indian tax service: ‘Activities of the US Corporation constitute a PE in India, because information from the US server to its Indian users is transmitted through ‘electromagnetic waves’.

‘Since such waves move with ‘very high velocity’, under the laws of physics this means that ‘space collapses and time stops while the transaction is conducted’. In such a situation, the server located in a foreign country ‘becomes one’ with Indian customers’ computers and, as such, leads to the creation of a PE located in India.’

Did you follow that?

So, if one were to follow this theory to its conclusion, then everyone doing e-business is everywhere relative to everyone else, and that everyone is in one place but also everywhere else at the same time. Simple, really.

Related reading