Protocol

PROTOCOL

The Government of the United States of America and the Government of the Republic of Argentina, desiring to conclude a Protocol clarifying and supplementing the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital to be signed simultaneously with the signing of this Protocol, have agreed upon the following points:

  1. In connection with paragraph 2 of Article 11 (Interest) and paragraph 2 of Article 12 (Royalties), the Contracting States agree that, if the rate of Argentine taxes on either interest or royalties paid to persons who are not residents of Argentina is raised significantly above the rates on those types of income prevailing as of August 16, 1979, they will consult further with a view to determining whether the provisions of the above mentioned paragraphs, or any other provisions of the Convention, should be revised; in connection with Article 13 (Capital gains), the Contracting States agree that, if either of them begins to subject to a tax covered by the Convention gains derived by non-residents from the alienation of shares or other corporate rights (other than shares or other corporate rights covered by the provisions of Article 13), they will consult further with a view to determining whether the provisions of Article 13, or any other provision of the Convention, should be revised.
  2. In connection with paragraph 2 of Article 12 (Royalties), for the purpose of computing the Argentine tax on royalties with respect to the use of, or the right to use, industrial, commercial or scientific equipment in Argentina, Argentina shall allow deductions for expenses incurred in Argentina directly in producing such royalties, a reasonable allowance for depreciation, and the expenses (such as freight and insurance) of introducing such equipment into Argentina.
  3. In connection with paragraph 2 of Article 17 (Artistes and athletes), it is agreed that the first portion of that paragraph allows each Contracting State to apply its own domestic law with respect to the taxation of companies employing entertainers, artistes or athletes. Each Contracting State, in computing its tax, shall allow deductions in accordance with its law.
  4. In connection with Article 2 (Taxes covered) and Article 23 (Relief from double taxation), it is agreed that the provisions of this Convention shall not be construed to prevent the application by Argentina of its Foreign Investment Law Tax on Remittances (Impuesto a las Remesas de la ley de inversiones extranjeras), or the application by Argentina of the first sentence of the first paragraph of Article 21 of Title I of the Argentine tax on profits in force on August, 16, 1979; however, the United States is not obligated by the Convention to allow a credit against United States tax for Argentine tax levied under the above-mentioned provisions.