Business profits taxation hinges on permanent establishment attribution and distinct-enterprise profit allocation rules.

Business profits are taxable only in the resident State unless an enterprise carries on business in the other Contracting State through a permanent establishment, in which case only profits attributable to that permanent establishment may be taxed there. Attributable profits are to be computed as if the permanent establishment were a distinct and separate enterprise, with deductions allowed for expenses incurred for the permanent establishment subject to domestic law and the rule that deductions not permissible for a separate enterprise are disallowed. Purchases of goods alone do not give rise to attributed profits, the attribution method must be applied consistently year to year, and other Articles govern income dealt with separately.

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