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1. DEFINITION AND GENERAL PRINCIPLES

40. For the purpose of this study a foreign enterprise may be defined as a non-resident enterprise — i.e., belonging to an individual residing abroad, or to a partnership or company which has its registered office in a foreign country. If the real centre of management of a partnership or company is in a country other than that of its registered office, the former will determine its place of residence (see paragraphs 7 and 23).

41. A general rule regarding the liability of foreign enterprises cannot be given, as, under the Ordinance, it is necessary to examine the circumstances of each case. A foreign enterprise is taxable if it derives income from economic relations with N.E.I., such as by carrying on business in N.E.I. for more than three months, or by having an establishment there (see paragraphs 9 and 25). It is also taxable on income from certain specified sources, such as income from participations in a resident partnership, income from real property, interest on mortgage loans (see paragraph 45), and mining royalties. With regard to income from the taxable sources indicated, other than income from a profession or business, the liability exists irrespective of whether it is received at a N.E.I. establishment or abroad.

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