Article 7 - Business Profits

Article 7 confirms that profits of an enterprise of one State are taxable only in that State, except to the extent attributable to a Permanent Establishment in the other State. Where a PE exists, the State in which the PE is situated may tax profits attributable to the PE. The "attributable" determination uses arm's-length principles. Force-of-attraction principle (taxing the entire profits once any PE is found) is not adopted in most India treaties - only profits actually attributable to the PE are taxed.