Business profits taxation limited to residence unless a permanent establishment creates attributable taxable profits.

Business profits are taxable only in the State of residence unless an enterprise carries on business in the other State through a permanent establishment, in which case only profits attributable to that establishment may be taxed there. Attribution must reflect the profits the permanent establishment would earn as a distinct and separate enterprise under similar conditions; allowable deductions include expenses incurred for the permanent establishment, subject to local tax law limits, and purchases of goods alone do not generate attributable profits.

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