[Senate Treaty Document 108-26]
[From the U.S. Government Publishing Office]
108th Congress
2d Session SENATE Treaty Doc.
108-26
_______________________________________________________________________
SECOND PROTOCOL AMENDING TAX CONVENTION
WITH BARBADOS
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
transmitting
SECOND PROTOCOL AMENDING THE CONVENTION BETWEEN THE UNITED STATES OF
AMERICA AND BARBADOS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME SIGNED ON
DECEMBER 31, 1984, SIGNED AT WASHINGTON ON JULY 14, 2004; INCLUDING AN
EXCHANGE OF NOTES WITH ATTACHED UNDERSTANDINGS
September 13, 2004.--The Protocol 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, September 13, 2004.
To the Senate of the United States:
With a view to receiving the advice and consent of the
Senate to ratification, I transmit the Second Protocol Amending
the Convention Between the United States of America and
Barbados for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income
Signed on December 31, 1984, signed at Washington on July 14,
2004. Also enclosed for the Senate's information is an exchange
of notes with attached Understandings, which provide
clarification with respect to the application of the
Convention, as amended, in specified cases. Also transmitted
for the information of the Senate is the report of the
Department of State with respect to the Protocol.
The Protocol updates the existing Convention to bring it
into close conformity with current U.S. tax treaty policy and
to ensure that the Convention cannot be used inappropriately to
secure tax reductions in circumstances where there is no risk
of double taxation. The Protocol would modernize the
Convention's anti-treaty-shopping provision. The Protocol also
updates the Convention to take account of a 1996 change in the
Internal Revenue Code relating to the tax treatment of certain
former long-term residents of the United States. The exchange
of notes with attached Understanding provides guidance to
taxpayers and each government regarding the intended
interpretation of certain provisions of the Convention, as
amended.
I recommend that the Senate give early and favorable
consideration to this Protocol and give its advice and consent
to ratification.
George W. Bush.
LETTER OF SUBMITTAL
----------
Department of State,
August 26, 2004.
The President,
The White House.
The President: I have the honor to submit to you, with a
view to its transmission to the Senate for advice and consent
to ratification, the Second Protocol Amending the Convention
Between the United States of America and Barbados for the
Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income Signed on December 31,
1984, signed at Washington on July 14, 2004 (the ``Protocol'').
Also enclosed for the information of the Senate is an exchange
of notes with attached Understandings, which provides
clarification with respect to the application of the
Convention, as amended, in specified cases.
The proposed Protocol was negotiated to ensure that the
Convention, concluded in 1984, cannot be used inappropriately
to secure tax reductions in circumstances where there is no
risk of double taxation. The proposed Protocol also updates the
Convention to reflect changes in U.S. tax law and to bring the
Convention into closer conformity with current U.S. tax treaty
policy.
Article 2 of the proposed Protocol includes a revised
``Limitation on Benefits'' provision, which is designed to deny
``treaty-shoppers'' the benefits of the Convention. The new
provision corresponds more closely to those in recent U.S.
treaties than did the provision in the existing Convention. The
new provision also includes enhanced protections against new
forms of potential treaty shopping.
The existing Convention preserves the U.S. right to tax
former citizens whose loss of citizenship had, as one of its
principal purposes, the avoidance of tax. In order to reflect
1996 amendments to the applicable provision of the Internal
Revenue Code, Article 1 of the proposed Protocol expands this
right to include taxation of former long-term residents whose
loss of such status had, as one of its principal purposes, the
avoidance of tax. Article 3 of the proposed Protocol includes a
clarification to the operation of the Convention's information
exchange provision.
The exchange of notes with attached Understanding
accompanying the proposed Protocol provides additional
explanations and guidance regarding the agreed interpretation
of the Convention, as amended.
The proposed Protocol will enter into force upon the
exchange of instruments of ratification. It will have effect,
with respect to taxes withheld at source, on the first day of
the second month next following the date ofentry into force.
With respect to other types of taxes it will have effect for taxable
years beginning on or after January 1 of the year following the date of
entry into force.
The Department of the Treasury and the Department of State
cooperated in the negotiation of the proposed Protocol. It has
the full approval of both Departments.
Respectfully submitted,
Colin L. Powell.