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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

Business Profits

(1) The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as are attributable to that 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, there shall, in each Contracting State, be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct enterprise engaged in the same or substantially similar activities under the same or substantially similar conditions and dealing wholly 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 the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which this permanent establishment is situated or elsewhere; in the last case a share of the general expenses of the place of management of the enterprise may be attributed to the result of the different permanent establishments in proportion to the turnover accrued by each one of them.

Where the apportionment of the general expenses of the place of management, under the conditions defined above, does not permit bringing out a normal share or a normal profit, the competent authorities of the two States may, having regard to the provisions of Article 25 of the Convention, proceed to make the necessary adjustments in determining the profits of   the permanent establishment.

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

(6) Where, profits include items of income that 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.