(1) The profits of an enterprise of one of the Contracting
States shall be taxable only in that Contracting 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, tax may be imposed in
that other Contracting State on the profits of the enterprise but
only on so much thereof as is attributable to that permanent
establishment.
(2) Where an enterprise of one of the Contracting States
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 at arm's length
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 all expenses, including
executive and general administrative expenses which would be
deductible if the permanent establishment were an independent
enterprise, insofar as they are reasonably allocable to the
permanent establishment, whether incurred 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 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 an apportionment as may be
customary; the method of apportionment adopted shall, however, be
such that the result shall be in accordance with the principles
laid down 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) Where profits include any item which is dealt with
separately in another Article of this Convention, the provisions of
that other Article shall not be affected by the provisions of this
Article.
