DT2860.7 - DT: Azerbaijan: double taxation agreement, SI95 No 762, 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 is 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 and
separate enterprise engaged in the same or similar activities under
the same or 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 expenses which are incurred
for the purposes of the permanent establishment, including a
reasonable allocation of executive and general administrative
expenses incurred for the purposes of the enterprise as a whole,
whether in the Contracting State in which the permanent
establishment is situated or elsewhere.
4) Insofar as it has been customary in a Contracting State
to determine, according to its law, 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, nothing in
paragraph (2) of this Article shall preclude that Contracting State
from determining the profits to be taxed by such apportionment as
may be customary; the method of apportionment adopted shall,
however, be such that the result shall be in accordance with the
principles contained in 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 or capital gains
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.
