Permanent establishment attribution: only profits attributable to a PE may be taxed by the State where it operates.

Business profits are taxable only in the enterprise's State of residence except where business is carried on in the other Contracting State through a permanent establishment; only profits attributable to that permanent establishment may be taxed there. Attributable profits are those the permanent establishment would earn as a distinct and separate enterprise under similar conditions dealing independently. Deductions are allowed for expenses incurred for the permanent establishment, including executive and administrative costs incurred in or outside the State. Purchases of goods do not by themselves give rise to attributed profits, and the allocation method should be applied consistently year to year.

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