Permanent establishment profit attribution clarified: profits taxed only on attributable remuneration, with treaty adjustments for withholding taxes.

The Protocol requires that profits attributable to a permanent establishment be determined solely by the remuneration attributable to the establishment's actual activities, with contract profits apportioned between establishment and head office according to work performed locally; it prevents attribution based on mere facilitation of foreign trade, sets minimum allowable deductions for administrative expenses per Indian law at signature, excludes penalty amounts from being treated as interest, establishes a three year refund window for excess source taxation, and provides for application of lower withholding tax limitations and exemptions for dividends, interest, royalties and fees where later India-OECD Conventions or mutual agreements so limit source taxation.

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