(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 establishments situated therein. If the enterprises carries on business as aforesaid the prices of the enterprise may be taxed in other State but only so much of them as attributable to.

• (a) that permanent establishment;
• (b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or
• (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment,

provided that (b) or (c)shall not apply where an enterprise is able to demonstrate that the sales or business activities were not carried on for the purpose of avoiding tax liabilities in the other Contracting State.

(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 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 shown to have been incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

(4) 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; provided that where the permanent establishment is also used as a sales outlet for the goods or merchandise so purchased, the profits on such sales may be attributed to that permanent establishment.

(5) Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.