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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.

ARTICLE 7

Profit from Business Activity

(1) The profit from business activity derived by a person with permanent residency in a Contracting State shall be taxable only in that State, unless such person carries on business activity in the other Contracting State through a permanent establishment situated therein. If the business activity is done through a permanent establishment, then the profit of the aforesaid person may be taxed in the other State, but only so much of it as is attributable to that permanent establishment.

(2) Subject to the provisions of paragraph (3) of this article, where a person with permanent residency in a Contracting State does business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profit which it might be expected to make if it were a distinct and separate person engaged in the same or similar activity under the same or similar conditions, and dealt wholly independently of the person of which it is a permanent establishment.

(3) When determining the income (profit) relating to the activities of a permanent establishment, there shall be allowed as deductions documented expenses incurred for the purposes of the activities of that permanent establishment, including management and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

(4) If the practice exists in a Contracting State of determining profits relating to a permanent establishment on the basis of the distribution of the total profit of a person among its various divisions, none of the provisions of paragraph (2) must prevent the Contracting State from determining profit for taxation purposes by means of such distribution; the method for distributing profits for taxation purposes must not contradict the provisions set forth in this article.

(5) No profit shall be attributed to a permanent establishment by reason of the mere purchase by it of goods or merchandise for the person of which it is a permanent establishment.

(6) For the purpose of applying the provisions of the preceding paragraphs of this article, profit from business activities pertaining to a permanent establishment shall be determined by the same method year by year, unless there is good and sufficient reason to change it.

(7) Where profit from business activities includes types of income which 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.