Edited version of private advice

Authorisation Number: 1051629771341

Date of advice: 28 January 2020

Ruling

Subject: Permanent establishment

Question

Will the proposed activities to be carried out in Australia by AustraliaCo constitute a permanent establishment for ForeignCo under the tax treaty?

Answer

The proposed activities to be carried out in Australia by AustraliaCo do not constitute a permanent establishment for ForeignCo under the tax treaty.

This ruling applies for the following periods:

1 January 2019 to 31 December 2021

The scheme commences on:

1 January 2019

Relevant facts and circumstances

Foreign ParentCo is a non-resident and ultimate parent company of a group of companies engaged in a business of manufacturing (Group).

ForeignCo is a non-resident subsidiary of the Group also involved in manufacturing, where it purchases significant amount of raw materials in Australia from unrelated suppliers for use in its manufacturing sites overseas to produce goods and merchandise.

ForeignCo recently established AustraliaCo (also a subsidiary member of the Group) for the sole purpose of increasing and securing the purchase of raw materials in Australia.

AustraliaCo will be managed in Australia and is a resident of Australia for tax purposes.

AustraliaCo will employ a small number of employees in Australia and will be responsible for its day to day management and operations.

Proposed activities to be carried out in Australia

Under an agency agreement between AustraliaCo and ForeignCo, AustraliaCo was appointed by ForeignCo as its agent authorised to purchase on behalf of ForeignCo raw materials from unrelated suppliers, in return for a fee.

AustraliaCo's authority to act on ForeignCo's behalf will only relate to the purchase of raw materials from unrelated suppliers in Australia. Furthermore, AustraliaCo will also act only on behalf of ForeignCo and no other entities.

ForeignCo will not place orders with AustraliaCo, rather AustraliaCo will purchase as much raw materials in Australia it can acquire to meet the Group needs.

AustraliaCo may also identify, make contact and negotiate with new unrelated suppliers in order to secure and purchase the required raw materials.

Pricing and terms are largely standard and established already by ForeignCo, where ForeignCo will make direct payments to the unrelated suppliers of raw materials purchased by AustraliaCo.

AustraliaCo might receive instruction from ForeignCo in respect of Group policy and procedure required to be implemented at a local level so operations are consistent and meet the Group requirement, specifically, information such as the type of raw materials to be acquired in the market.

The title to the raw materials will pass from the unrelated suppliers to ForeignCo before, or at the facilities. That is, AustraliaCo will never hold the title to the raw materials.

AustraliaCo will not undertake any sales activities of the raw materials legally owned by ForeignCo, nor will it undertake any sales activities of other goods and merchandise.

AustraliaCo will also not undertake any manufacturing or processing in Australia of any raw materials, goods or merchandise belonging to ForeignCo.

Under a services agreement between AustraliaCo and ForeignCo, AustraliaCo will provide complementary services to ForeignCo such as obtaining lease of warehouses in Australia and other administrative functions, in return for a fee.

AustraliaCo will lease warehouses from unrelated parties to store the raw materials purchased from the unrelated suppliers. It will also arrange for the inbound delivery of the raw materials to the warehouses, ensure compliance with Australian environmental requirement, and arrange for transportation of the raw materials to Australian ports for export.

The complementary services will be undertaken in the name of AustraliaCo to enable the raw materials to reach ForeignCo.

AustraliaCo may engage unrelated parties to carry out certain activities e.g. transport, with AustraliaCo as the contracting party.

The raw materials will be transferred by the ForeignCo to its manufacturing sites overseas only after the raw materials had been exported from Australia and are received by the ForeignCo.

AustraliaCo will pay the costs relating to storage at the warehouses and delivery of raw materials prior to shipping whilst costs related to shipping the raw materials such as handling and insurance will be paid by ForeignCo.

ForeignCo will continue to have no employees or assets in Australia, and furthermore will not own, lease or occupy any offices, facilities or premises in Australia.

Reasons for decision

1.       The definition of permanent establishment in a tax treaty is important in determining whether Australia has the right to tax a non-resident in respect of activities carried out in Australia by, or on behalf of, that non-resident.

2.       Articles 4(1), 4(2)(g) and 4(4)(a) of the Singapore Convention relevantly states:

1. For the purposes of this Agreement, the term "permanent establishment", in relation to an enterprise, means a fixed place of business through which the business of the enterprise is wholly or partly carried on.

2. The term "permanent establishment" includes but is not limited to -

...

(g) a warehouse except where it is used solely for any of the purposes mentioned in paragraph 4;

...

4. An enterprise shall not be deemed to have a permanent establishment merely by reason of -

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; [emphasis added]

3.       In this case, ForeignCo is a non-resident engaged in a business of manufacture, where it currently purchases significant raw materials in Australia from unrelated suppliers for use in its manufacturing sites overseas to produce goods and services.

4.       In order to increase and secure raw materials in Australia, ForeignCo incorporated AustraliaCo and appointed it as its agent under an agency agreement.

5.       The raw materials purchased will be stored at warehouses leased by AustraliaCo from unrelated parties. The title to the raw materials will pass from the independent suppliers to ForeignCo at the warehouses, or earlier if the raw materials are to be acquired ex works. That is, AustraliaCo will not hold the title to the raw materials, at any stage.

6.       ForeignCo will therefore be conducting a part of its business in warehouses in Australia when its agent, AustraliaCo, acquires raw materials where it is subsequently stored at the warehouses. For the purposes of the Country A Convention, ForeignCo has a fixed place of business, being the warehouses, that could constitute a permanent establishment through which its business or enterprise is partly carried on, unless the warehouses are used solely for any of the purposes mentioned in the exemption to the permanent establishment article in the Country A Convention.

Permanent establishment warehouse exception

7.       The Country A Convention states that a permanent establishment includes a warehouse except where it is used solely for any purposes listed in the exemption to the permanent establishment article. Relevantly for ForeignCo, it will be deemed not to have a permanent establishment if the leased warehouses will be used solely 'for the purpose of storage or display of goods or merchandise belonging to the enterprise' under the permanent establishment article. [emphasis added]

8.       However, unlike most of Australia's other treaties such as the Country B Convention, the tax treaty omits the reference to 'delivery' in Article 4(4)(a). That is, the following exception (e.g. in Article 5(6) of the Country B Convention) to what constitutes a permanent establishment includes activities such as delivery, which is absent in the Country A Convention:

(a)         the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise...[emphasis added]

9.       The Country A Convention does not contain the term 'delivery' nor is there an explanation as to why the term was removed from the list of permanent establishment exceptions following the entry into force of the Protocol amending the Agreement between the Government of the Commonwealth of Australia and the Government of the Republic of Country A for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income of 11 February 1969.

10.    Taxation Ruling TR 2001/13 Income tax: Interpreting Australia's Double Tax Agreements (TR 2001/13) provides guidance on interpreting Australia's double tax agreements. Specifically, paragraph 64 of TR 2001/13 states:

The domestic law meaning for this purpose may, for Australia, be the statute-defined meaning, or where there is no relevant statutory definition, the 'common law' meaning of the term.

11.    According to ForeignCo, the warehouses will be leased by AustraliaCo from independent parties and are to be located in certain States in Australia. Therefore, based on guidance from paragraph 64 of TR 2001/13, the Australian domestic legislation on sale of goods may be of relevance in understanding the common law meaning of 'delivery'.

12.    Under the Australian domestic legislation, 'delivery' means the same as the 'voluntary transfer of possession from one person to another'. In addition, 'goods' also has the same meaning under the Australian domestic legislation as follows and will therefore apply to the raw materials that will be purchased by AustraliaCo on behalf of ForeignCo:

includes all chattels personal other than things in action and money. The term includes emblements and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;

1.       Although it is not relevant in determining the meaning of 'delivery' from an Australian perspective, section 61 of the Sale of Goods Act of Country Aalso defines delivery as follows, and for our purposes, has similarities with the Australian domestic legislations' definition:

voluntary transfer of possession from one person to another except that, in relation to sections 20A and 20B [not presently relevant], it includes such appropriation of goods to the contract as results in property in the goods being transferred to the buyer

13.    In this case, after the raw materials is purchased from the unrelated parties, the raw materials will require it to be moved or transferred from wherever it is initially stored or held to the warehouses for storage. The transfer of the title and therefore possession of raw materials will only transfer from the unrelated party to ForeignCo at the warehouses (except where the raw materials is acquired ex works, the title transfers at an earlier point in time). At no time will raw material title ever pass to AustraliaCo.

14.    Accordingly, under the relevant Australian domestic law, the transfer of the raw materials title from the supplier to ForeignCo will involve 'delivery' of raw materials at the warehouses (where the purchase of raw material is not ex works) because there has been a transfer at the warehouses of possession of raw materials from the supplier to ForeignCo.

15.    It is therefore not just the storage of raw materials that will occur at the warehouses because there will also be delivery activities taking place such that arguably the exception to what constitutes a permanent establishment under the tax treaty might not apply to ForeignCo.

16.    Paragraph 94 of TR 2001/13 however provides, in relation to the interpretation of tax treaties, that the '...rules of construction will not be as detailed and rigid as they might be if the courts were to interpret domestic legislation or domestic instruments, and gaps, imprecision and ambiguities should be accepted as sometimes inevitable in such a text, and to some extent accommodated or 'smoothed over' in a way that addresses the context and meets the object and purpose of the DTA'.

17.    Paragraph 96 of TR 2001/13 goes on to say that the '...Vienna Convention rules should...be applied when interpreting any of Australia's DTAs, as a matter of practice'.

18.    Paragraph 97 of TR 2001/13 cites the relevant provision of the Vienna Convention in respect of treaty interpretation:

Article 31: General rule of interpretation

(1) A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to terms of the treaty in their context and in the light of its object and purpose;

(2) The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

(a) Any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty;

(b) any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

(3) There shall be taken into account, together with the context:

(a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;

(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties relating to its interpretation;

(c) any relevant rules of international law applicable in the relations between the parties.

(4) A special meaning shall be given to a term if it is established that the parties so intended.

Article 32: Supplementary means of interpretation

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of Article 31, or to determine the meaning when the interpretation according to Article 31:

(a)   leaves the meaning ambiguous or obscure; or

(b) leads to a result which is manifestly absurd or unreasonable.

19.    Finally, paragraphs 104 and 112 of TR 2001/13 provides for the use of guidance and supplementary aid in the interpretation of DTAs:

104. The Commentaries, with the various Observations and Reservations of OECD Member countries which they reproduce (and which are further considered below⁸⁶), therefore provide important guidance on interpretation and application of the OECD Model and as a matter of practice will often need to be considered in interpretation of DTAs, at least where the wording is ambiguous, which (as noted above⁸⁷) is inherently more likely in treaties than in general domestic legislation.

...

112. Although not as well developed as the processes and procedures that surround the OECD Model Convention, the UN Model Convention and its Commentaries and materials that explain the provisions of that Model⁹² may constitute a supplementary aid to interpretation where Australia's DTAs draw upon the UN Model. In a formal sense, the admissibility of this material is subject to the same general limitations as applies to the OECD Model and Commentaries, although as it forms the main basis of negotiations for fewer DTAs than does the OECD Model, more evidence may be required as to its relevance and its weight.

20.    Accordingly, we can understand the nature and origin of the exception of 'delivery' under the permanent establishment article by using relevant extrinsic materials such as the OECD, 2017, Model Convention With Respect To Taxes On Income and On Capital, 21 November 2017, OECD Publishing, Paris (OECD Model Convention); the United Nations, 1980, Model Double Taxation Convention between Developed and Developing Countries, United Nations Publication, New York (UN Model Convention 1980); and the Commentaries therein. And then determine how the exception applies to the circumstances of ForeignCo by having regard to the Vienna Convention rules of treaty interpretation and also guidance from TR 2001/13 that we not apply such a rigid rules of construction in interpreting treaty provisions.

Omission of 'delivery' in the permanent establishment article

21.    In a majority of Australia's comprehensive tax treaties, for example:

Article 5(3)(a) of the USA tax treaty

Article 5(6)(a)) of the Japan tax treaty, and

Article 5(5)(a) of the UK tax treaty,

a permanent establishment is deemed not to include '...the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise'. [emphasis added]

22.    However, in five of the tax treaties (India, Indonesia, Norway, Russia and Singapore) the term 'delivery' is not included. In some tax treaties such as South Africa and Turkey, the term 'irregular delivery' is used whereas in the Sri Lankan tax treaty, the term is 'occasional delivery'.

23.    In the tax treaty the term 'delivery' was removed from Articles 4(4)(a) and (b) by the Singaporean Protocol No.1, so that they read as follows:

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

24.    Paragraph 20 of the UN Model Convention 1980 commentary states on page 67 that the deletion of the word 'delivery' is intended by certain countries because:

'...the presence of a stock of goods for prompt delivery facilitates sales of the product and thereby the earning of profit in the host country by the enterprise having the facility. A continuous connexion and hence the existence of such a supply of goods, they argued, should constitute a permanent establishment, leaving as a separate matter the determination of the proper amount of income properly attributable to the permanent establishment. [emphasis added]

25.    Based on the UN Model Convention 1980 commentary above, it appears that the omission of the word 'delivery' in the exception to the permanent establishment definition is to ensure - in respect of countries adopting the approach - that there is a permanent establishment in a host country in circumstances where all of the following exists:

-                  there is presence of goods in a host country

-                  there is a prompt delivery of those goods

-                  the prompt delivery facilitates the sales of a product, and

-                  the sales result in the earning of profits in that host country by having that warehouse.

2.       Furthermore, to warrant the existence of a permanent establishment in the host country in respect of a warehouse, there also needs to be a continuous connection between the presence and prompt delivery of those goods with the facilitating of the sales of a product and the earning of profits in the host country from the sales as a result of having the warehouse.

3.       This view is reiterated in the United Nations, 2017, Model Double Taxation Convention between Developed and Developing Countries, United Nations Publication, New York (UN Model Convention 2017) where it states in the following pages that:

153 & 154 - '...the deletion of "delivery" from the excluded activities described in subparagraphs (a) and (b) of paragraph 4 means that a "warehouse" used for any pur­pose is (subject to the conditions in paragraph 1 being fulfilled) a per­manent establishment under the general principles of the Article'

184 - 'the omission of the expression in the United Nations Model Convention as an important point of departure from the OECD Model Convention, believing that a stock of goods for prompt delivery facilitates sales of the product and thereby the earning of profit in the host country. [emphasis added]

26.    In this case, after the purchase of raw materials and its subsequent delivery to the relevant warehouses by the suppliers, there will also be a requirement for a subsequent transfer of the raw materials from the warehouses to the relevant Australian ports. Thereafter, it also requires loading of the raw materials to the ships before it can commence its journey to the country of residence of ForeignCo.

27.    Once the raw materials has been shipped and arrives at its overseas destination, it will also require transportation from the overseas ports to the refineries so it can be used by ForeignCo to produce and sell goods and merchandise and earn itself profits from the sale.

28.    Therefore, the warehouses do not give rise to the prompt delivery of raw materials that facilitates the sales of goods and merchandise thereby resulting in the earning of profits in Australia by ForeignCo as a consequence of having those warehouses. That is, the circumstances described in the commentaries in the 1980 and 2017 UN Model Conventions do not exist in ForeignCo's circumstances.

29.    Furthermore, it is arguable that there is not the required continuous connection between the presence and prompt delivery of raw material at the warehouses with that of the eventual sales of goods and merchandise produced from the raw materials and the resulting earning of profits in Australia, as a result of the storage and delivery activities taking place at those Australian warehouses.

30.    It is accepted that there will be economic value added in respect of the storage and delivery activities taking place at the warehouses in relation to the raw materials that will subsequently be used by ForeignCo to produce and sell goods and merchandise and earn itself profits. However, this in itself is not sufficient to establish that required continuous connection between the delivery activities at the warehouses and the earning of the profits in Australia from sales of goods and merchandise.

Ancillary delivery activities

31.    ForeignCo's contentions are that there will always be physical transfers of goods into and out of the warehouses because of the necessity of moving the raw materials into and out of the warehouses and by its nature will therefore involve delivery in bringing the raw materials from the possession of the suppliers to the warehouses. Hence, there is no instance where delivery will not take place if the raw material is to get to the warehouses for storage (noting that transfer of possession takes place prior to the warehouses where the raw materials are purchased ex works).

32.    Therefore, ForeignCo contends that the delivery is merely ancillary to the storage of the raw materials at the warehouses, and further this should not result in the exception to the permanent establishment under Article 4(4)(a) not applying.

33.    The Commissioner agrees in this case that the delivery involved in getting the raw materials to the Australian warehouses is only ancillary or incidental to the purchasing of raw materials by AustraliaCo on behalf of ForeignCo and its subsequent storage.

34.    The general rule advocated by the Vienna Convention is to interpret treaties in good faith and in accordance with their ordinary meaning and to have regard to their context. Therefore, this suggests that activities such as the incidental delivery activities at the warehouses be considered as preparatory or auxiliary in character and should not give rise to a permanent establishment.

35.    Therefore, having regard to the guidance in TR 2001/13, and the abovementioned Model Conventions, commentaries and rules on interpretation, it is considered that the permanent establishment exception under Article 4(4)(a) applies because the warehouses are used solely for the purpose of storage of raw materials belonging to ForeignCo, notwithstanding there is ancillary or incidental delivery activities involved.

36.    Consequently, there will not be a permanent establishment in Australia for ForeignCo in respect of the proposed activities that will take place at the warehouses.

Dependent agent permanent establishment

37.    As AustraliaCo is a dependent agent of ForeignCo, the provisions of Article 4(5) of the Country A Convention need to be considered to determine whether the activities of AustraliaCo, on behalf of ForeignCo, shall constitute a deemed permanent establishment of ForeignCo.

38.    Under Article 4(5) certain activities carried out in a Contracting State by persons who act on behalf of an enterprise may create a permanent establishment in that State for that enterprise insofar as the person is not carrying on a business as an independent agent pursuant to Article 4(6).

39.    As described earlier, ForeignCo will purchase raw materials from independent suppliers in Australia through its appointed agent, AustraliaCo, where the raw materials will be used in its overseas refineries to produce goods and merchandise.

40.    Specifically, the role of AustraliaCo as an agent under the agency agreement is to purchase raw materials from unrelated Australian suppliers on behalf of ForeignCo. The main features of this agent role are as follows:

a.     AustraliaCo will not take title of any raw materials purchased on behalf of ForeignCo at any stage and instead ForeignCo will be the legal purchaser and owner of raw materials purchased in Australia by AustraliaCo once the title passes from the source supplier.

b.     ForeignCo does not place order with AustraliaCo, rather AustraliaCo will be purchasing as much raw materials that it can acquire in the Australian market which meets the Group needs.

c.      Payment is made directly from ForeignCo to the Australian supplier of raw materials.

d.     The role to be carried out by AustraliaCo is similar to existing models used elsewhere by the Group.

e.     AustraliaCo will have the authority to conclude contracts on behalf of ForeignCo, but the contracts it will conclude are exclusively in relation to the purchase of raw materials for ForeignCo.

f.       There are no other situations where AustraliaCo will have the authority to conclude contracts on ForeignCo's behalf.

g.     AustraliaCo will not undertake any sales activities of the raw materials which are legally owned by ForeignCo and stored in Australia, and as such it will not regularly fill any orders on behalf of ForeignCo in relation to materials or products maintained in Australia that belong to ForeignCo.

h.     AustraliaCo will not undertake any sales activities and therefore will not habitually secure orders in Australia wholly or principally for the Group.

i.       AustraliaCo will not manufacture or process in Australia for ForeignCo any materials or products belonging to ForeignCo.

j.       AustraliaCo will receive a service fee for its role as an agent.

k.      AustraliaCo might receive instruction from ForeignCo in respect of Group policy and procedure required to be implemented at a local level so operations are consistent and meet the Group requirement, specifically, information such as the type of raw materials to be acquired in the market.

41.    Therefore, under the agency agreement AustraliaCo will be an agent acting on behalf of ForeignCo only in respect of the purchase of raw materials from independent Australian suppliers for the purposes of Article 4(5). Furthermore, AustraliaCo will not be an independent agent pursuant to Article 4(6) as it was incorporated solely to act as an agent for ForeignCo and will not undertake activities on behalf of other entities.

42.    AustraliaCo will also perform complementary services to enable the raw materials to reach the legal purchaser, ForeignCo, and for the raw materials to be transported for shipping overseas. These complementary services will be undertaken in the name of AustraliaCo and include:

a.       Leasing warehouses from third parties for the raw materials.

b.       Arranging the inbound delivery of the raw materials from the suppliers to storage warehouses located in Australia.

c.       Ensuring compliance with Australian environmental requirements.

d.       Arranging the onward logistics to transport the raw materials from the warehouses to the relevant port for export.

43.    These complementary services constitute the service role which AustraliaCo will carry out in Australia in return for a fee from ForeignCo under the services agreement.

44.    However, these complementary services and service role to be carried out by AustraliaCo in Australia are not activities to which Article 4(5) applies. This is because AustraliaCo will be carrying out these activities and role in its capacity as a service provider under the services agreement in return for a service fee. Therefore AustraliaCo will not be an agent acting on behalf of ForeignCo in respect of these specific activities and role.

45.    Accordingly, to determine whether ForeignCo will have a dependent agent permanent establishment in Australia under Article 4(5), we need to enquire whether any of the four paragraphs in Article 4(5) will apply to the role of AustraliaCo as an agent under the agency agreement.

Article 4(5)(a)

46.    Article 4(5)(a) of the Country A Convention provides that a person, other than an independent agent, acting in one State on behalf of the enterprise of another State is deemed to be a permanent establishment of the enterprise in the first mentioned State, providing the person:

(a)... has, and habitually exercises in the first-mentioned Contracting State, an authority to conclude contracts for or on behalf of the enterprise unless the exercise of such authority is limited to the purchase of goods or merchandise for that enterprise... [Emphasis added]

47.    Under the agency agreement AustraliaCo will be able to enter into contracts with independent Australian suppliers to purchase as much raw materials it can acquire in the Australian market on behalf of ForeignCo based on the Group needs. AustraliaCo's actions will legally bind ForeignCo because ForeignCo is the legal purchaser and owner of the raw materials and will be required, as such, to make payments directly to the Australian suppliers.

48.    AustraliaCo will therefore be habitually exercising in Australia an authority to conclude contracts on behalf of ForeignCo. These contracts are exclusively in relation to the purchase of raw materials from independent Australian suppliers and furthermore any purchases of raw materials will also exclusively be on behalf of ForeignCo.

49.    Therefore, there will not be a dependent agent permanent establishment under Article 4(5)(a) as the exception in that article will apply because AustraliaCo's authority to conclude contracts under the agency agreement will be limited to the purchase of raw materials on behalf of ForeignCo.

Articles 4(5)(b) to (d)

50.    Articles 4(5)(b) to (d) also describe as follows other circumstances where there could be a dependent agent permanent establishment:

(b) there is maintained in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he or she regularly fills orders on behalf of the enterprise; or

(c) the person habitually secures orders in the first-mentioned Contracting State wholly or principally for the enterprise itself or for any other enterprise which is controlled by it or has a controlling interest in it; or

(d) in so acting the person manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise. [Emphasis added]

51.    As described earlier, under the agency agreement AustraliaCo is limited to its agent role which entails purchasing as much raw materials it can acquire in the Australian market on behalf of ForeignCo based on the Group needs.

52.    That is, AustraliaCo will not be undertaking:

-                  the purchase of raw materials for the Group entities other than for ForeignCo, and

-                  sales activities of goods or merchandise, or processing or manufacturing of goods or merchandise, belonging to or on behalf of ForeignCo.

53.    Accordingly, AustraliaCo will not be maintaining a stock of goods or merchandise belonging to, and for the purposes of regularly filling orders on behalf of, ForeignCo; nor will AustraliaCo be habitually securing orders of raw materials or other goods or merchandise on behalf of, or in the control of, ForeignCo.

54.    Finally, AustraliaCo will also not be manufacturing or processing in Australia any goods or merchandise belonging to or on behalf of ForeignCo.

55.    Therefore, there will also not be a dependent agent permanent establishment under Articles 4(5)(b) to (d) as the relevant criteria in the paragraphs will not apply to AustraliaCo's agent role under the agency agreement.

Conclusion

56.    ForeignCo will therefore not have a permanent establishment in Australia under Article 4 of the Singapore Convention in respect of the proposed business activities to be carried on in Australia by AustraliaCo.