Business profits allocation: only profits attributable to a permanent establishment may be taxed in the host State.

Profits of an enterprise are taxable only where the enterprise is resident 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; attribution follows the separate and independent enterprise principle, allows deductions for expenses incurred for the permanent establishment subject to host State law, disallows certain payments between permanent establishment and head office (except specified banking interest allowances), permits customary apportionment consistent with the Article, forbids attribution solely for purchases, and requires consistent application year to year.

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