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, 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 independent enterprise engaged in
the same or similar activities under the same or similar conditions.
3. In determining the profits of a permanent establishment, there shall be allowed as
deductions expenses which are reasonably connected with such profits, including executive and
general administrative expenses, whether incurred in the State in which the permanent
establishment is situated or elsewhere.
4. A partner shall be considered to have realized income or incurred deductions to the extent
of his share of the profits or losses of a partnership, as provided in the partnership agreement
(provided that any special allocations of profits or losses have substantial economic effect). For
this purpose, the character (including source and attribution to a permanent establishment) of any
item of income or deduction accruing to a partner shall be determined as if it were realized or
incurred by the partner in the same manner as realized or incurred by the partnership.
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 of this Article, the profits to be attributed to
the permanent establishment shall include only the profits or losses derived from the assets or
activities of the permanent establishment and shall be determined by the same method year by
year unless there is good and sufficient reason to the contrary.
7. Any profit attributable to a permanent establishment, according to the provisions of this
Article, during its existence may be taxed in the Contracting State in which such permanent
establishment is situated, even if the payments are deferred until such permanent establishment
has ceased to exist.
8. Where profits include items of income 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.