Permanent establishment profit attribution governs taxation of enterprise profits where business is carried on through a local PE. Profits of an enterprise are taxable only in its State unless it carries on business in the other Contracting State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Profits are attributed as if the permanent establishment were a distinct and separate enterprise under similar conditions; allowable deductions include expenses incurred for the permanent establishment, but inter-office charges (other than reimbursements of actual expenses) such as royalties, fees, commissions, management charges or, except for banks, interest are not deductible or taken into account. Customary apportionment may be used if consistent with the Article; purchases alone do not create attributable profits and the attribution method should be applied year to year.