Permanent establishment principle: business profits taxable where attributable to a PE, limited to profits of that PE. Profits of an enterprise are taxable only in its resident State unless it carries on business in the other State through a permanent establishment, in which case only profits attributable to that PE may be taxed there. Profits attributable to a PE are determined by arm's length, separate enterprise principles or, if necessary, by estimation consistent with the Article. Deductions for expenses incurred for the PE, including executive and administrative expenses, are allowed subject to domestic limitations; certain inter office payments (royalties, commissions, management fees, and interest except for banks) are not deductible or recognised for attribution purposes.