Permanent establishment taxation: profits attributable to a local PE may be taxed in that State under treaty rules. Profits of an enterprise are taxable only in its Contracting State unless business is carried on through a permanent establishment in the other State, in which case only profits attributable to that PE may be taxed there. The PE should be attributed the profits it would make as a distinct and separate enterprise under similar conditions; where precise attribution is difficult profits may be estimated by apportionment. Deductions for expenses incurred for the PE, including executive and general administrative expenses, are allowed subject to local law limitations, while non-reimbursed payments between PE and head office such as royalties, management fees, commissions, and (except for banks) interest are not deductible or otherwise taken into account. Purchases of goods do not create attributable profits, and the method of attribution is to be applied consistently year to year.