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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), where an enterprise of a Contracting State carries on its business in the other Contracting State through a permanent establishment situated therein, then in each Contracting State there shall be attributed to such permanent establishment, profits that might have been 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, expenses that are incurred for the purposes of the permanent establishment, including executive and general administrative expenses, whether incurred in the State in which the permanent establishment is situated or elsewhere, under the laws and regulations of that State. However, no deduction shall be allowed for the amount which would otherwise be paid (for purposes other than the reimbursement of expenses incurred) by the permanent establishment to the head office of the enterprise or to any other offices of the enterprise by way of royalties, fees or other similar payments for the use of patents or other rights, or by way of commission for rendering specific services, management activity or, except in the case of a banking enterprise, as interest on money lent to the permanent establishment.

(4) No profits shall be attributed to a permanent establishment if the permanent establishment merely purchases goods or merchandise for the enterprise.

(5) Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, the provisions of paragraph (2) shall not preclude that Contracting State from determining the profits to be taxed by such a customary apportionment. However, the method of apportionment adopted shall be such that the result obtained is in accordance with the principles contained in this Article.

(6) Where the information made available to the competent authority of a Contracting State is not sufficient to determine the profits derived by a permanent establishment, the provisions of this Article shall not affect the application of any laws or regulations of that Contracting State in respect of the determination of taxes levied on that permanent establishment. The taxable profits of the permanent establishment shall be determined by the competent authority of the Contracting State under the prevailing laws or regulations of that State, due consideration being given to the information made available to that competent authority and to the other provisions of this Article.

(7) For the purposes 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.

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