Article 7 of DTAA: Tax Rules for Business Profits Between States, Permanent Establishment Guidelines and Profit Attribution.

Article 7 of the Double Taxation Avoidance Agreement (DTAA) between two contracting states outlines the taxation of business profits. Profits from an enterprise in one state are taxable only in that state unless the enterprise operates through a permanent establishment in the other state. In such cases, only profits attributable to that establishment may be taxed there. Profits are determined as if the establishment were an independent entity, with allowable deductions for relevant expenses. Customary profit apportionment methods are permitted, provided they align with the article's principles. Profits from mere purchasing activities are not attributed to the permanent establishment.