Substantial Business Activities Test
/ˌsʌbstænʃəl ˈbɪznəs ækˈtɪvɪtiz tɛst/
Definitions
- (n.) A legal standard used to determine whether a company engages in sufficient economic activity within a jurisdiction to qualify for tax benefits or treaty benefits.
The multinational corporation passed the substantial business activities test, thereby qualifying for reduced withholding tax under the treaty.
Forms
- substantial business activities test
Related terms
See also
Commentary
This test typically assesses factors such as payroll, assets, and revenue to ascertain genuine operational presence, avoiding mere paper entities used for tax avoidance.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.