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of <h1>Article 7 DTAA: Tax Business Profits Only in State of Origin Unless Permanent Establishment Exists Elsewhere</h1> Article 7 of the Double Tax Avoidance Agreement (DTAA) between two Contracting States addresses the taxation of business profits. Profits from an enterprise in one State are taxable only in that State unless the business is conducted through a permanent establishment in the other State. In such cases, only profits attributable to the permanent establishment, related sales, or similar business activities in the other State may be taxed there. Profits for a permanent establishment are determined as if it were an independent entity, with deductions allowed for business expenses. However, certain payments, like royalties or interest, are not deductible. Profits from mere purchasing activities are not attributed to the permanent establishment. The method of determining profits should remain consistent annually unless justified otherwise. Other income items covered by different Articles remain unaffected by this Article.
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