Permanent establishment profit attribution limited to PE activities; head office supplies excluded and specified inter-company charges disallowed.

The Protocol limits profit attribution to a permanent establishment to profits from its own activities, excludes value of machinery or equipment supplied from head office or third parties, and disallows attribution of planning, project, research and technical-service income to a foreign permanent establishment; it provides anti-avoidance conditions for attributing sales, prescribes minimum head office expense deductions, forbids certain payments from a permanent establishment to head office (except reimbursements and limited banking interest), and sets rules on taxation of shipping income, dividends, interest and information exchange safeguards.

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