Business profits taxation: taxable in residence unless attributable to a permanent establishment in the other State. Profits are taxable only in the State of residence unless attributable to a permanent establishment in the other State; such profits are determined as if the permanent establishment were a distinct and separate enterprise dealing independently. Deductions are allowed for expenses incurred for the permanent establishment under the domestic law of the State where it is situated, but non-reimbursement payments to the head office (royalties, fees, commissions, management charges, and, except for banks, interest) are not deductible and reciprocal charges by the permanent establishment to the head office are disregarded. Purchases alone do not give rise to attributed profits and the same attribution method applies year-by-year.