Business profits: taxable only in resident State unless attributable to a permanent establishment treated as a distinct enterprise.

Business profits are taxable only in the resident State unless the enterprise operates in the other State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attributable profits are to be computed as if the permanent establishment were a distinct and separate enterprise operating under similar conditions; customary apportionment methods under domestic law may be used so long as they conform to these principles. Expenses incurred for the permanent establishment, including allowable executive and administrative expenses, are deductible, but payments to the head office (other than reimbursements) for royalties, fees, commissions, management charges or, except for banks, interest, are disallowed. Purchases alone do not give rise to attributed profits, and items covered by other Articles remain governed by those Articles.

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