- (a) An enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
- (b) The same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
(2) Where profits on which an enterprise of a Contracting State has been charged to tax in that State are included, under the terms of paragraph (1), in the profits of an enterprise of the other Contracting State and taxed accordingly and the profits so included are profits which would have accrued to that enterprise of the other Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then the first-mentioned State shall make an appropriate adjustment in order to avoid double taxation of the profits so included. In determining such adjustment, due regard shall be had to the other provisions of this Convention in relation to the nature of the income, and for this purpose the competent authorities of the Contracting States shall, if necessary, consult each other.