[Congressional Record (Bound Edition), Volume 145 (1999), Part 20]
[Senate]
[Pages 28856-28857]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     TAX CONVENTION WITH VENEZUELA

  The resolution of ratification is as follows:

       Resolved, (two-thirds of the Senators present concurring 
     therein), That the Senate advise and consent to the 
     ratification of the Convention between the Government of the 
     United States of America and the Government of the Republic 
     of Venezuela for the Avoidance of Double Taxation and the 
     Prevention of Fiscal Evasion with Respect to Texas on Income 
     and Capital, together with a Protocol, signed at Caracas on 
     January 25, 1999 (Treaty Doc. 106-3), subject to the 
     understanding of subsection (a), the declarations of 
     subsection 9(b), and the proviso of subsection (c).
       (a) Understandings.--The Senate's advice and consent is 
     subject to the following understandings, which shall be 
     included in the instrument of ratification, and shall be 
     binding on the President:

[[Page 28857]]

       (1) Prevention of double exemption.--Where under Article 7 
     (Business Profits) or Article 14 (Independent Personal 
     Services) of this Convention income is relieved from tax in 
     one Contracting State and, under the law in force in the 
     other Contracting State a person is not subject to tax in 
     that other Contracting State in respect of such income, then 
     the relief to be allowed under this Convention in the first-
     mentioned Contracting State shall apply only to so much of 
     the income as is subject to tax in the other Contracting 
     State. This understanding shall cease to have effect when the 
     provisions of Venezuela's Law Amending the Income Tax Law 
     (hereinafter the ``new Venezuelan tax law''), relating to the 
     implementation of a worldwide tax system in replacement of 
     Vnezuela's current territorial tax system, are effective in 
     accordance with the provisions of such new Venezuelan tax 
     law.
       (2) Venezuelan Branch Profits Tax.--The United States 
     understands that the reference to an ``additional tax'' in 
     Article 11A of the Convention includes the tax that may be 
     imposed by Venezuela (the ``Venezuelan Branch Tax'') pursuant 
     to the relevant provisions of the new Venezuelan tax law. In 
     addition, the United States understands that the limit 
     imposed under Article 11A of the Convention shall apply with 
     respect to the Venezuelan Branch Tax and that for purposes of 
     that article the Venezuelan Branch Tax shall be imposed only 
     on an amount not in excess of the amount that is analogous to 
     the ``dividend equivalent amount'' defined in subparagraph 
     (a) of paragraph 10 of the Protocol with respect to the 
     United States.
       (b) Declarations.--The Senate's advice and consent is 
     subject to the following declarations, which shall be binding 
     on the President:
       (1) New Venezuelan Tax Law.--Before the President may 
     notify Venezuela pursuant to Article 29 of the Convention 
     that the United States has completed the required 
     ratification procedures, he shall certify to the Committee on 
     foreign Relations that:
       (i) the new Venezuelan tax law has been enacted in 
     accordance with Venezuelan law;
       (ii) the Department of the Treasury in consultation with 
     the Department of State, has thoroughly examined the new 
     Venezuelan tax law; and
       (iii) the new Venezuelan tax law is fully consistent with 
     and appropriate to the obligations under the Convention.
       (2) Treaty interpretation.--The Senate affirms the 
     applicability to all treaties of the constitutionally based 
     principles of treaty interpretation set forth in Condition 
     (1) of the resolution of ratification of the INF Treaty, 
     approved by the Senate on May 27, 1988, and Condition (8) of 
     the resolution of ratification of the Document Agreed Among 
     the States Parties to the Treaty on Conventional Armed forces 
     in Europe, approved by the Senate on May 14, 1997.
       (c) Proviso.--The resolution of ratification is subject to 
     the following proviso, which shall be binding on the 
     President:
       (1) Supremacy of Constitution.--Nothing in the Convention 
     requires or authorizes legislation or other action by the 
     United States of America that is prohibited by the 
     Constitution of the United States as interpreted by the 
     United States.

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