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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.


Business Profits

(1) The profits of a company of a Contracting State shall be taxable only in that State unless the company carries on business in the other Contracting State through a permanent establishment located therein. If the company carries on business as aforesaid, the profits of the company may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

(2) Subject to paragraph (3), when a company of a Contracting State carries on business in the other Contracting State through a permanent establishment located therein, it is charged, in each Contracting State, to that permanent establishment the profits it would have to make if it were a distinct company engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the company of which it is a permanent establishment

(3) To determine the profits of a permanent establishment, there shall be allowed the deduction of expenses incurred for the purposes of the permanent establishment, including expenses of executive and general administrative expenses so generated, whether in the Contracting State in which the permanent establishment is located, elsewhere. However, no deduction shall be allowed for sums which, if any, would be paid (other than reimbursement of expenses incurred) by the permanent establishment at the head office of the undertaking or any of its other offices, such as royalties, fees or other similar payments for the use of patents or other rights, or as commissions, for specific services rendered or for any other management activity or, except in the case of a business as the interest on sums lent to the permanent establishment, the same sums paid by the permanent establishment from the account of the head office of the company or of any of its offices.

(4) If it is customary in a Contracting State to determine the profits attributable to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, no provision of paragraph (2) shall preclude that Contracting State from determining the taxable profits to be taxed according to the distribution in use; the allocation method adopted must, however, be such that the result obtained is in accordance with the principles contained in this Article.

(5) No profit is attributed to a permanent establishment because it simply purchased goods or merchandise for the business.

(6) For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to proceed otherwise.

(7) Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.