Tax Treaty with Armenia

Summary of United States Tax Treaty with Armenia:

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The meeting discusses the ratification of a tax convention between the United States and the Union of Soviet Socialist Republics aimed at promoting economic and cultural relations by eliminating tax barriers.

Convention on Taxation Between the US and USSR

This convention aims to eliminate tax barriers and promote economic and cultural relations between the United States and the Soviet Union.

• Signed on June 20, 1973, and entered into force on January 29, 1976.

• Ratified by both countries, with the US Senate advising ratification on December 15, 1975.

• Focuses on avoiding double taxation and outlines tax exemptions for various income types.

Key Articles of the Convention

The convention includes several articles detailing the taxation framework and definitions.

• Article I covers the taxes that are subject to the convention, including All-Union taxes for the USSR and Internal Revenue Code taxes for the US.

• Article II provides general definitions, including terms like "resident" and "competent authorities."

• Article III specifies income subject to tax, including royalties, engineering services, and interest on trade financing.

Exemptions and Special Provisions

The convention outlines specific exemptions to facilitate trade and cooperation.

• Exemptions include income from personal services for government employees and participants in intergovernmental cooperation programs.

• Teachers and researchers are exempt from taxes on income from teaching or research activities.

• Students can receive stipends or scholarships without being taxed for up to five years.

Non-Discrimination and Mutual Agreement

The convention includes provisions to ensure fair treatment and resolve disputes.

• Article X establishes non-discrimination, ensuring citizens of one state are not taxed more than citizens of the other state.

• Article XI allows residents to present cases to competent authorities if they face taxation not in accordance with the convention.

Termination and Effectiveness of the Convention

The convention has specific terms regarding its duration and termination.

• It remains in effect for three years and continues indefinitely unless terminated with six months' notice.

• Provisions can be terminated separately after three years, affecting specific articles related to exemptions.

Tax Status of Soviet Foreign Trade Agents

The agreement clarifies the tax status of brokers and agents working for Soviet foreign trade organizations in the USA.

• Firms acting as brokers for Soviet organizations are not considered independent if controlled by Soviet entities.

• Brokers with only commission income will be taxed solely on that income.

Exemptions for Living Expenses

The provisions outline exemptions for living expenses for individuals under certain conditions.

• Exemption under subparagraph 1.(e) is capped at $10,000 or its ruble equivalent per taxable year.

• Exemption under subparagraph 1.(d) will generally apply to a lesser amount, determined case by case.

Tax Exemptions at Local Levels

The agreement emphasizes the need for tax exemptions at various governmental levels.

• Both Contracting States will work to secure exemptions from taxes imposed at the republic, state, or local levels.

Tax Jurisdiction Over Journalists

The agreement addresses tax jurisdiction for journalists and correspondents on foreign assignments.

• Tax jurisdiction remains with both Contracting States for journalists and correspondents.

• Exemption under subparagraph 1.(c)(1) applies for a two-year period, regardless of invitation by a governmental agency.

• Exemptions apply only to compensation received from abroad.

Customs Duties Clarification

The text clarifies the treatment of customs duties in relation to the agreement.

• Customs duties are not classified as taxes for the purposes of Article IX and paragraph 3 of Article X.