Does Amazon FBA stock create a permanent establishment in Australia?

Generally, no — but the reason that actually holds up is not the one most sellers are given. The usual answer points to the storage and delivery exemption in Article 5(4) of Australia’s tax treaties. That exemption has been narrowed by treaty change since 2017. The argument that survives is simpler and stronger: an Amazon fulfilment centre was never at your disposal to begin with.

This is the most technical question in non-resident seller tax, and it is worth getting the order of the arguments right.

(General information only, current at August 2026. Confirm your own position before acting.)

What is actually at stake

A permanent establishment converts a GST-only relationship into full Australian income taxation of the profits attributable to it. That is why the question matters, and why it gets answered carelessly in both directions — by alarmists selling structure, and by forums waving it away.

Start by separating two things that are constantly conflated:

• GST turns on whether your supplies are connected with Australia. Stock in an Australian warehouse settles that — yes.
• Income tax turns, for treaty-country sellers, on whether you have a permanent establishment. Stock in a warehouse does not settle that at all.

Registering for GST tells the ATO you sell here. It does not concede that your profits are taxable here.

Where the rules come from

Australian domestic law assesses a foreign resident on ordinary income from Australian sources (ITAA 1997 s 6-5(3)). Source is a common-law question of fact.

But where a double tax agreement applies, its business profits article (Article 7) generally provides that Australia may tax an enterprise’s business profits only if it carries on business through a permanent establishment here — and then only the profits attributable to that establishment. The treaty, given force by the International Tax Agreements Act 1953, prevails over the domestic source rules.

So for sellers resident in a treaty country — China and the United States both have comprehensive treaties with Australia — permanent establishment is the whole question.

For sellers in a jurisdiction with no treaty, there is no Article 7 shield and the analysis reverts entirely to source. Hong Kong has no comprehensive treaty with Australia, which matters because many Chinese sellers trade through Hong Kong entities. That is a different framework, covered separately in this series.

The three tiers, in the order they should be argued

Tier 1 — the warehouse was never at your disposal (the primary position)

Article 5(1) defines a permanent establishment as a fixed place of business through which the business of the enterprise is wholly or partly carried on. A fixed place of business requires that the place be at the disposal of the enterprise — an effective power to use that location for its business.

The 2017 OECD Commentary on Article 5 develops the disposal test at length and addresses this exact pattern: where an enterprise’s goods are stored in a warehouse operated by an independent logistics provider, and the enterprise has no right of access to or use of the premises, the warehouse is not at the enterprise’s disposal and is not its place of business.

Apply that to FBA honestly. You cannot enter an Amazon fulfilment centre. You cannot direct its staff, choose which building your stock sits in, or occupy any part of it. You hold a service contract for storage and fulfilment — not a right over premises.

On this ground alone the standard FBA pattern fails Article 5(1), and the Article 5(4) exemptions never need to be reached.

Tier 2 — the specific activity exemptions (the fallback)

Even if a warehouse were somehow attributed to you as a place of business, Article 5(4) in most Australian treaties excludes facilities used solely for storage, display or delivery of the enterprise’s goods, and stock maintained solely for those purposes. Warehousing plus outbound fulfilment is squarely that.

This is the argument sellers already know. It should be your second line, not your first — because of Tier 3.

Tier 3 — the treaty change most advisers miss

BEPS Action 7 narrowed these exemptions. Under Article 13 of the Multilateral Instrument, Australia adopted Option A: the specific activity exemptions apply only where each activity is of a preparatory or auxiliary character.

For a pure reseller, storing and delivering your trading stock is arguably a core function of the business, not something preparatory or auxiliary. Where Option A has effect, the Tier 2 shield weakens materially. An anti-fragmentation rule (MLI Article 13(4)) separately prevents splitting activities among closely related entities to stay inside the exemptions.

Three practical disciplines follow:

Check the synthesised text for your treaty. MLI modification requires both countries to have made compatible choices for that specific agreement. Australia adopted Option A; the other country may have chosen differently or reserved — in which case the unmodified Article 5(4) survives. The ATO publishes synthesised treaty texts. Confirm the operative wording for your treaty pair before relying on anything.

The United States is a clean case. The US is not an MLI signatory at all, so the Australia–US treaty is unmodified and the storage exemptions stand as originally drafted.

Never let Tier 2 carry the file alone. Because the MLI can strip the storage exemption of independent force, the defensible primary position is Tier 1 — no place at your disposal — which the MLI does not touch.

Anyone who leads with the storage exemption is reading a pre-2017 textbook.

Does Amazon act as your agent?

Articles 5(5)–(6) add a dependent agent permanent establishment where a person habitually concludes contracts on the enterprise’s behalf — excluding independent agents acting in the ordinary course of their own business.

On the standard marketplace model, Amazon does not create an agency permanent establishment. It is an independent operator serving thousands of principals in the ordinary course of its own platform business, and it does not negotiate or conclude bespoke contracts for you — sales occur on your listed terms, through an automated platform. The MLI’s commissionaire provision (Article 12), where it applies, targets captive sales-agent and commissionaire structures, not arm’s-length marketplaces.

The pattern that does create agency risk is quite different: an Australian-resident individual — an employee, a contractor, or a relative — soliciting wholesale customers, negotiating terms, or habitually securing orders for you.

The risk screen

Your situation	Effect on permanent establishment risk
Stock in Amazon FBA or an arm’s-length 3PL only	Baseline — no place at your disposal
Your own or exclusively leased warehouse space	Material elevation — premises at your disposal
Australian employees or sales contractors	Material elevation — fixed place and/or dependent agent risk
A director or key manager relocating to Australia	Severe — central management and control risk dominates
Related Australian entities sharing functions	Anti-fragmentation analysis required
Hong Kong or other non-treaty entity	Different framework entirely — source-based

That fourth row deserves emphasis. If central management and control moves to Australia — a director relocating and making high-level decisions here (see TR 2018/5) — the company risks becoming an Australian tax resident taxed on worldwide income. That is a categorically worse outcome than a permanent establishment, and it is triggered by people moving, not stock moving.

Engaging an Australian accountant does not create this problem: compliance and agent work is administration, not central management and control.

What to do next

If your pattern is stock in FBA or an arm’s-length 3PL, no Australian staff, no local contracting authority and decisions made offshore, the standard position is no permanent establishment — and it should be written down before anyone asks, not after. A one-page position paper recording the treaty, the disposal reasoning and the facts it rests on is what converts “we didn’t lodge a return” from an omission into a position.

If any row below the first in that table describes you, the analysis genuinely changes and is worth doing properly.

Start with the 2-minute GST registration check for the GST side, and see AusTax Bridge for a written assessment across all six determinations.

General information only, current at August 2026. It does not take your circumstances into account. Permanent establishment outcomes depend on your specific treaty, its synthesised text, and the facts of your operations. Confirm your position with a registered tax agent before acting.