ARTICLE 8

Business Profits

1. Industrial or commercial profits of a resident of one of the Contracting States shall be taxable only in that Contracting State unless such resident is engaged in industrial or commercial activity through a permanent establishment in the other Contracting State. If such a resident of one of the Contracting States is so engaged, tax may be imposed by that other Contracting State on the industrial or commercial profits of that resident but only on so much of such profits as are attributable to the permanent establishment in that other Contracting State.

2. Where a resident of one of the Contracting States engages in industrial or commercial activity in the other Contracting State through a permanent establishment situated therein, there shall be attributed to that permanent establishment the industrial or commercial profits which it might be expected to derive in that other Contracting State if it were an independent entity engaged in the same or similar activities under the same or similar conditions and dealing at arm's length with the resident of which it is a permanent establishment.

3. In the determination of the industrial or commercial profits of a permanent establishment there shall be allowed as deductions, expenses wherever incurred, which are reasonably connected with such profits, including executive and general administrative expenses.

4. No profits shall be deemed to be derived merely by reason of the purchase of goods or merchandise by a permanent establishment, or by the resident of which it is a permanent establishment, for the account of that resident.

5. For the purposes of the preceding paragraphs, the profits to be attributed to a permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

6. For purposes of this article, the term "industrial or commercial profits" means income derived from the active conduct of a trade or business. It includes profits from manufacturing, mercantile, agricultural, fishing, transportation, communication, or extractive activities, from the

rental of tangible personal (movable) property, from the furnishing by an individual of the personal services of another person and from the furnishing by a corporation of the personal services of its employees. It includes income dealt within Article 12 (Dividends), Article 13 (Interest), Article 14 (Royalties), and Article 15 (Income from Real Property), but only if the right or property giving rise to the dividends, interest, royalties, or income from real property is effectively connected with a permanent establishment which the recipient, being a resident of one Contracting State, has in the other Contracting State. It does not include insurance premiums or income received by an individual for his performance of personal services (either as an employee or in an independent capacity); nor does it include rentals from motion picture films or films or tapes for radio or television broadcasting.