background image
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.

ARTICLE 7

Business Profits

(1) Profits of an enterprise of a Contracting State shall be taxed only in that Contracting State unless such enterprise carries on business activities in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of such enterprise may be taxed in the other State but only so much of them as are attributable to such permanent establishment.

(2) Subject to the provisions of paragraph (3) of this Article, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, then in each Contracting State there shall be attributed to that permanent establishment, profits which it may have earned if it had been a distinct and separate enterprise, engaged in the same or similar activities under the same or similar conditions and dealing wholly and independently with the enterprise of which it is a permanent establishment.

(3) In determining the profits of a permanent establishment, there shall be allowed as deductions, any expenses which are incurred for the purposes of such permanent establishment, including executive and general administrative expenses.

(4) No profits shall be attributed to a permanent establishment, merely because the permanent establishment purchases goods or merchandise on behalf of the enterprise.

(5) If in a Contracting State the determination of profits, attributable to a permanent establishment, on the basis of proportional distribution of the total amount of profits of the enterprise to its various subdivisions, is a customary practice, nothing in paragraph (2) of this Article shall prohibit the Contracting State from determining the taxable profits by means of such distribution, as customarily accepted; the selected method of distribution shall be in keeping with the principles contained in this Article.

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

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

(5) No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

(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 the contrary.

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