Permanent establishment: profits attributable to a permanent establishment may be taxed where attributable under DTAA principles. Profits of an enterprise are taxable only in its State of residence unless it 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. Profits are attributed as if the permanent establishment were a distinct enterprise; deductions are allowed for expenses incurred for the permanent establishment subject to domestic law, while non reimbursement payments between head office and permanent establishment (royalties, fees, commissions, management charges and generally interest) are not deductible. Customary apportionment is permitted if it accords with these principles; mere purchases do not create attributed profits and attribution methods should be applied consistently.