Permanent establishment determines taxable business profits where attributable activities create taxable presence under the treaty. An enterprise is taxable in a State only if it carries on business there through a permanent establishment; only profits attributable to that permanent establishment, similar local sales, or similar activities may be taxed there. Attribution is on a distinct entity, arm's length basis or, if impracticable, by reasonable estimation. Deductions for expenses incurred for the permanent establishment are allowed subject to domestic limitations, but non reimbursement payments between the establishment and head office-royalties, management charges, commissions, and, except for banks, interest-are disregarded for profit attribution.
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Provisions expressly mentioned in the judgment/order text.
Permanent establishment determines taxable business profits where attributable activities create taxable presence under the treaty.
An enterprise is taxable in a State only if it carries on business there through a permanent establishment; only profits attributable to that permanent establishment, similar local sales, or similar activities may be taxed there. Attribution is on a distinct entity, arm's length basis or, if impracticable, by reasonable estimation. Deductions for expenses incurred for the permanent establishment are allowed subject to domestic limitations, but non reimbursement payments between the establishment and head office-royalties, management charges, commissions, and, except for banks, interest-are disregarded for profit attribution.
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