3. In determining the profits of a permanent establishment, there shall be allowed

as deductions expenses which are incurred for the purposes 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. 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 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 contained 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. For the purposes of the preceding paragraphs, 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.

7. 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.

ARTICLE 8

SHIPPING AND AIR TRANSPORT

1. Profits from the operation of ships or aircraft in international traffic shall be

taxable only in the Contracting State in which the place of effective management of the

enterprise is situated.

2. If the place of effective management of a shipping enterprise is aboard a ship,

then it shall be deemed to be situated in the Contracting State in which the home

harbour of the ship is situated, or, if there is no such home harbour, in the Contracting

State of which the operator of the ship is a resident.

3. The provisions of paragraph 1 shall also apply to profits from the participation in

a pool, a joint business or an international operating agency.

4. Whenever companies from different countries have agreed to carry on an air

transportation business together in the form of a consortium or a similar form of

association, the provisions of paragraph 1 shall apply to such part of the profits of the

consortium or association as corresponds to the participation held in that consortium or

association by a company that is a resident of a Contracting State.

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