Business profits attribution limits taxation to profits attributable to a permanent establishment under treaty methods.

Profits of an enterprise are taxable only in its State unless business is carried on in the other State through a permanent establishment; then only profits attributable to that permanent establishment and related sales or similar activities may be taxed there. Attribution follows the separate enterprise standard, permitting reasonable estimates when necessary. Deductible expenses incurred for the permanent establishment's business are allowed subject to host State law, but non reimbursement payments between head office and establishment (royalties, fees, commissions, management charges and, except for banks, interest) are disregarded. Customary apportionment and year to year consistency rules apply.

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