Permanent establishment profits: attribute taxable income as if the PE were a separate enterprise, limiting interoffice deductions.

Profits of an enterprise are taxable only in the State of residence unless business is carried on in the other State through a permanent establishment, where only profits attributable to that permanent establishment may be taxed. Such profits are attributed by treating the permanent establishment as a distinct and separate enterprise dealing independently under similar conditions. Deductions are allowed for expenses incurred for the permanent establishment subject to local tax law limits, but not for non reimbursement charges between the establishment and head office such as royalties, service or management fees, commissions, or, except for banking, interest. Apportionment customs, non attribution for mere purchases, year to year consistency, and the primacy of other Articles for separately dealt income are preserved.

---

---

---