Permanent establishment: Profits attributable to a PE may be taxed in the state where the PE operates.

Profits of an enterprise are taxable only in the State of residence 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. Attribution requires treating the permanent establishment as a distinct and separate enterprise dealing independently; allowable deductions include expenses, including executive and administrative costs, under the State's tax rules. No profits are attributed solely for purchases by the permanent establishment. The attribution method must be applied consistently year to year, and items covered by other Convention Articles remain governed by those Articles.

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