[Senate Treaty Document 104-11]
[From the U.S. Government Publishing Office]



   104th Congress 1st                        F
         Session
                                 SENATE              Treaty Doc.
                                                        104-11
_______________________________________________________________________



                                     



 
     EXCHANGE OF NOTES RELATING TO THE TAX CONVENTION WITH UKRAINE

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

   AN EXCHANGE OF NOTES DATED AT WASHINGTON MAY 26 AND JUNE 6, 1995, 
    RELATING TO THE CONVENTION (SEE TREATY DOC. 103-30) BETWEEN THE 
   GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF 
  UKRAINE FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF 
 FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL, TOGETHER 
     WITH A RELATED PROTOCOL, SIGNED AT WASHINGTON ON MARCH 4, 1994




 June 30, 1995.--Treaty was read the first time and, together with the 
accompanying papers, referred to the Committee on Foreign Relations and 
            ordered to be printed for the use of the Senate
  
                         LETTER OF TRANSMITTAL

                              ----------                              

                                    The White House, June 28, 1995.
To the Senate of the United States:
    I transmit herewith an exchange of notes dated at 
Washington May 26 and June 6, 1995, for Senate advice and 
consent to ratification in connection with the Senate's 
consideration of the Convention Between the Government of the 
United States of America and the Government of Ukraine for the 
Avoidance of Double Taxation and the Prevention of Fiscal 
Evasion with Respect to Taxes on Income and Capital, together 
with a related Protocol, signed at Washington on March 4, 1994 
(``the Taxation Convention''). Also transmitted for the 
information of the Senate is the report of the Department of 
State with respect to the exchange of notes.
    This exchange of notes addresses the interaction between 
the Taxation Convention and other treaties that have tax 
provisions, including in particular the General Agreement on 
Trade in Services (GATS), annexed to the Agreement Establishing 
the World Trade Organization, done at Marrakesh April 15, 1995.
    I recommend that the Senate give favorable consideration to 
this exchange of notes and give its advice and consent to 
ratification in connection with the Taxation Convention.
                                                William J. Clinton.
  
                          LETTER OF SUBMITTAL

                              ----------                              

                                       Department of State,
                                         Washington, June 10, 1995.
The President,
The White House.
    The President: I have the honor to submit to you an 
exchange of notes, dated at Washington May 26 and June 6, 1995, 
with a view to transmission of these notes to the Senate for 
advice and consent to ratification in connection with the 
Senate's consideration of the Convention between the Government 
of the United States of America and the Government of Ukraine 
for the Avoidance of Double Taxation and the Prevention of 
Fiscal Evasion with Respect to Taxes on Income and Capital, 
together with a related Protocol, signed at Washington on March 
4, 1994 (the ``Taxation Convention''). This exchange of notes 
addresses the interaction between the Taxation Convention and 
other treaties and agreements that have provisions affecting 
taxes.
    The United States is a party to the General Agreement on 
Trade in Services (GATS'') annexed to the Agreement 
Establishing the World Trade Organization, done at Marrakesh 
April 15, 1994. GATS entered into force on January 1, 1995. 
Although the United States is a party to GATS, the Government 
of Ukraine is not yet a party. The exchange of notes ensures 
first that, if Ukraine accedes to the GATS and GATS obligations 
become applicable between the United States and Ukraine, the 
dispute resolution mechanisms of the Taxation Convention would 
govern national treatment disputes regarding taxation measures. 
The exchange of notes further provides that the non-
discrimination provisions of the Taxation Convention, rather 
than the national or most-favored-nation treatment obligations 
of any other agreement (except for the General Agreement on 
Tariffs and Trade, if it applies between the United States and 
Ukraine, and the Agreement on Trade Relations Between the 
United States and Ukraine, signed on May 6, 1992) will apply to 
taxation measures except those outside the scope of the 
Taxation Convention.
    Provisions similar to those in this exchange of notes are 
included in the taxation conventions between the United States 
and Portugal, Sweden, and France, which have been transmitted 
to the Senate.
    The Department of Treasury and the Department of State 
cooperated in the negotiation of the Convention and the most 
recent exchange of notes. The notes have the full approval of 
both Departments.
    Respectfully submitted,
                                                     Peter Tarnoff.
  
                                       Department of State,
                                          Washington, May 26, 1995.
His Excellency Yuriy Shcherbak,
Ambassador of Ukraine.
    Excellency: I have the honor to refer to the Convention 
between the Government of the United States of America and the 
Government of the United States of America and the Government 
of Ukraine for the Avoidance of Double Taxation and the 
Prevention of Fiscal Evasion with Respect to Taxes on Income 
and Capital, together with a related Protocol, signed at 
Washington on March 4, 1994 (``Taxation Convention'') and the 
General Agreement on Trade in Services (``GATS'').
    The Government of the United States is a Party to the GATS, 
annexed to the Agreement Establishing the World Trade 
Organization, done at Marrakesh April 15, 1994. The Government 
of Ukraine is not yet a party to the GATS. The United States 
and Ukraine have, however, considered the relationship between 
the Taxation Convention and the GATS in the event that the GATS 
applies between them, particularly with regard to the 
Consultation provision in Article XXII of the GATS and the 
Most-Favored-Nation and National Treatment provisions in 
Articles II and XVII of the GATS. In addition, the United 
States and Ukraine have considered the relationship between the 
Taxation Convention and other agreements that apply between 
them and that have provisions concerning national treatment or 
most-favored-nation treatment.
    To address these issues, I have the honor to propose that:
          (1) notwithstanding Article XXII and footnote II of 
        the GATS, in the event that the GATS applies between 
        the United States and Ukraine, a dispute concerning 
        whether a measure is within the scope of the Taxation 
        convention shall be considered only pursuant to Article 
        26 (Mutual Agreement Procedure) of the Taxation 
        Convention by the competent authorities of the United 
        States and Ukraine as defined in subparagraph 1(j) of 
        Article 3 (General Definitions); and
          (2) unless the competent authorities determine that a 
        taxation measure is not within the scope of the 
        Taxation Convention, national treatment or most-
        favored-nation obligations under any other agreement 
        (including GATS in the event that it applies between 
        the United States and Ukraine) shall not apply to a 
        taxation measure, except for such national treatment or 
        most-favored-nation obligations as may apply to trade 
        in goods under the Agreement on Trade Relations between 
        the United States and Ukraine, signed on May 6, 1992, 
        and the General Agreement on Tariffs and Trade if it 
        applies between the United States and Ukraine.
    If this proposal is acceptable to the Government of 
Ukraine, I have the further honor to propose that this note, 
and your Govern- 
ment's note in reply, shall constitute an agreement which shall 
enter into force on the date the Taxation Convention enters 
into force.
    Accept, Excellency, the renewed assurances of my highest 
consideration.
    For the Secretary of State:
                                                       Alan Larson.