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(1) The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on trade or business in the other Contracting State through a permanent establishment situated there- in, If the enterprise carries on trade or business as afore- said, 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.
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(2) Where an enterprise of a Contracting State carries on trade or 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 perma- nent establishment.
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(3) In determining the profits of a permanent establish- ment situated in one of the Contracting States, there shall be allowed as deductions all expenses which would be deductible under the law of that Contracting State if the permanent establishment were an independent enter- prise in so far as such expenses are reasonably allocable to the permanent establishment including executive and general administration expenses so deductible and allocable, whether incurred in that Contracting State in which the permanent establishment is situated or else- where.
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(4) Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a per- manent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph (2) 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.
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(5) No profits shall be attributed to a permanent estab- lishment by reason of the mere purchase by that perma- nent establishment of goods or merchandise for the enterprise,
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(6) If the information available to the competent authority concerned is inadequate to determine the profits to be attributed to the permanent establishment, such profits may be determined by the exercise of a dis- cretion or the making of an estimate by that competent authority, provided that such discretion shall be exercis- ed or such estimate shall be made in accordance with the principles stated in this Article.
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(7) For the purposes of the preceding paragraph 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.
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(8) Where profits include items of income which are dealt with separately in other Articles of this Agree- ment, then the provisions of those Articles shall not be affected by the provisions of this Article.