Taxation of Income from a Composite Contract for a Turnkey Project

Abstract

In this article, the author reviews the legal provisions and landmark court decisions relating to the taxation of income from a composite contract entered into by a foreign company. He delineates the uncertainties surrounding the tax liability from such projects, which is the subject of much litigation. He concludes that a foreign company’s tax liability arising from the offshore supply and offshore services component of the composite contract is fairly settled, provided that the contractual documents are carefully drafted.