Permanent establishment principle: only profits attributable to a permanent establishment may be taxed in the host State. Profits are taxable only in the enterprise's State of residence unless business is carried on in the other State through a permanent establishment; then only profits attributable to that permanent establishment may be taxed there. Attribution must reflect the profits the permanent establishment would earn as a separate enterprise dealing independently, with estimation by apportionment if necessary. Deductible expenses incurred for the permanent establishment, including executive and general administrative expenses, are allowed subject to the host State's taxation rules, while payments to or from the head office (royalties, management fees, commissions, and interest except for banks) are not taken into account. Purchases alone do not attribute profits, attribution methods should be used consistently, and other Articles govern income dealt with separately.