Permanent establishment principle: taxable profits attributable to an establishment may be taxed where the establishment operates.

Profits of an enterprise are taxable only in its Contracting State unless it carries on business in the other State through a permanent establishment, in which case only profits attributable to that PE may be taxed there. Attribution treats the PE as a distinct and separate enterprise under similar conditions, allowing deductions for PE incurred expenses subject to local tax law limits, while excluding non reimbursed intra enterprise payments (royalties, fees, commissions, management charges and, except for banks, interest) from deduction or attribution.

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