Bangladesh – USA Income Tax Treaty (1980)

BANGLADESH — U.S.A.
INCOME TAX TREATY
(1980)
Date of Conclusion: 6 October 1980.

Entry into Force: Not yet in force (see Article 27).

Effective Date: Not yet in force.

Note: This treaty was never ratified and thus will never become effective. A new treaty was signed on 26 September 2004 and is effective as of 1 October 2006/1 January 2007.
CONVENTION BETWEEN
THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND
THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF BANGLADESH
FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
Article 1
Personal scope

  1. Except as otherwise provided in this Convention, this Convention shall apply to persons who are residents of one or both of the Contracting States.
  2. Notwithstanding any provision of this Convention except paragraph 3 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Fiscal Domicile)), and by reason of citizenship may tax its citizens, as if this Convention had not come into effect. For this purpose the term “citizen” shall include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of income tax, but only for a period of 10 years following such loss.
  3. The provisions of paragraph 2 shall not affect:

(a) the benefits conferred by a Contracting State under paragraphs 1(b) and 4 of Article 18 (Pensions, etc.), Articles 22 (Relief from double taxation), 23

(Non-discrimination), and 24 (Mutual agreement procedure); and,

(b) the benefits conferred by a Contracting State under Articles 19 (Government service), 20 (Teachers, students and trainees) and 26 (Effect of convention on diplomatic agents and consular officers, domestic laws, and other treaties), upon individuals who are neither citizens of, nor have immigrant status in, that State.
Article 2
Taxes covered

  1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State.
  2. The existing taxes to which this Convention shall apply are:

(a) In the United States: the Federal income taxes imposed by the Internal Revenue Code and the tax on insurance premiums paid to foreign insurers (but only to the extent that the relevant risk is not reinsured, directly or indirectly, with a person not entitled to relief from such tax), but excluding the accumulated earnings tax and the personal holding company tax.

(b) In Bangladesh: the income tax and the super tax.

  1. The Convention shall apply also to any identical or substantially similar taxes which are imposed by a Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any changes which have been made in their respective taxation laws and shall notify each other of any official published material concerning the application of this Convention, including explanations, regulations, rulings, or juridical decisions.

Article 3
General definitions

  1. For the purpose of this Convention, unless the context otherwise requires:

(a) the term “person” includes an individual, a partnership, a company, an estate, a trust, and any other body of persons;

(b) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

(c) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(d) the term “international traffic” means any transport by a ship or aircraft, except where such transport is solely between places in the other Contracting State;

(e) the term “competent authority” means:

(i) in the United States: the Secretary of the Treasury or his delegate, and

(ii) in Bangladesh: the National Board of Revenue or their authorized representative;

(f) the term “United States” means the United States of America, but does not include Puerto Rico, the Virgin Islands, Guam or any other United States possession or territory;

(g) the term “Bangladesh” means the People’s Republic of Bangladesh;

(h) the term “national” means:

(i) in relation to Bangladesh all individuals possessing the nationality of Bangladesh and all legal persons, partnerships and associations deriving their status as such from the laws in force in Bangladesh; and

(ii) in relation to the United States all individuals possessing the citizenship of the United States of America and all legal persons, partnerships and associations deriving their status as such from the laws in force in the United States.

  1. As regards the application of this Convention by a Contracting State any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws of that State concerning the taxes to which this Convention applies.

Article 4
Fiscal domicile

  1. For purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature, provided, however, that:

(a) this term does not include any person who is liable to tax in that State in respect only of income from sources in that State; and

(b) in the case of income derived or paid by a partnership, estate, or trust, this term applies only to the extent that the income derived by such partnership, estate or trust is subject to tax as the income of a resident of that State, either in its hands or in the hands of its partners or beneficiaries.

  1. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his or her status shall be determined as follows:

(a) The individual shall be deemed to be a resident of the State in which he or she has a permanent home available; if such individual has a permanent home available in both States, or in neither State, he or she shall be deemed to be a resident of the State with which his or her personal and economic relations are closer (centre of vital interests);

(b) If the State in which the individual’s centre of vital interests cannot be determined, he or she shall be deemed to be a resident of the State in which he or she has an habitual abode;

(c) If the individual has an habitual abode in both States or in neither of them, he or she shall be deemed to be a resident of the State of which he or she is a national;

(d) If the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

  1. Where by reason of the provisions of paragraph 1 a company is a resident of both Contracting States, then if it is created or organized under the laws of a Contracting State or a political subdivision thereof, it shall be treated as a resident of that State.
  2. Where by reason of the provisions of paragraph 1 a person other than an individual or a company is a resident of both Contracting States, the competent authorities of the Contracting States shall by mutual agreement endeavour to settle the question and to determine the mode of application of the Convention to such person.
  3. Where under any provision of this Convention income arising in one of the Contracting States is relieved from tax in that Contracting State and, under the law in force in the other Contracting State a person, in respect of the said income, is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, 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 remitted to or received in the other Contracting State during the year such income accrues.

Article 5
Permanent establishment

  1. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
  2. The term “permanent establishment” shall include especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a store or other sales outlet;

(g) a warehouse; and

(h) a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources.

  1. A building site or construction or installation project, or an installation or drilling rig used for the exploration or development of natural resources, constitutes a permanent establishment only if it lasts more than 183 days.
  2. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e) provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

  1. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include the use of facilities or the maintenance of a stock of goods or merchandise belonging to the enterprise for the purpose of occasional delivery of such goods or merchandise.
  2. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State — other than an agent of an independent status to whom paragraph 7 of this Article applies — shall be deemed to be a permanent establishment in the first-mentioned State if:

(a) he has, and habitually exercises, in the first-mentioned State, a general authority to conclude contracts on behalf of the enterprise, unless his activities are limited to those described in either paragraph 4 or paragraph 5; or

(b) he has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders or makes deliveries on behalf of the enterprise and additional activities conducted in that State on behalf of the enterprise have contributed to the conclusion of the sale of such goods or merchandise.

  1. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.
  2. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6
Income from immovable property (real property)

  1. Income derived by a resident of a Contracting State from immovable (real) property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
  2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture, forestry and fishery, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
  3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
  4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article 7
Business profits

  1. The business profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the business profits of the enterprise may be taxed in that other State but only so much of them as is attributable to that permanent establishment.
  2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the business profits which it might be expected to make if it were a distinct and independent enterprise engaged in the same or similar activities under the same or similar conditions.
  3. In determining the business profits of a permanent establishment, there shall be allowed as deductions those expenses which are incurred for the purposes of the permanent establishment, including a reasonable allocation of executive and general administrative expenses, research and development expenses, interest, and other expenses for the purposes of the enterprise as a whole (or the part thereof which includes the permanent establishment), whether incurred in the State in which the permanent establishment is situated or elsewhere.
  4. No business profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
  5. For the purposes of the preceding paragraphs, the business profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
  6. Where business profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
  7. For the purposes of this Convention, “business profits” means income derived from any trade or business whether carried on by an individual, company or any other person, or group of persons, including the rental of tangible personal (movable) property.
  8. The United States tax on insurance premiums paid to foreign insurers shall not be imposed on insurance or reinsurance premiums which are the receipts of a business of insurance carried on by a resident of Bangladesh whether or not that business is carried on through a permanent establishment in the United States (but only to the extent that the relevant risk is not reinsured, directly or indirectly, with a person not entitled to relief from such tax).

Article 8
Shipping and air transport

  1. Profits of an enterprise of a Contracting State from the operation in international traffic of aircraft shall be taxable only in that State.
  2. For the purposes of this Article, profits from the operation in international traffic of aircraft include profits derived from the rental on a full or bareboat basis if operated in international traffic by the lessee or if such rental profits are incidental to other profits described in paragraph 1.
  3. The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, a joint business or an international operating agency.
  4. Subject to the provisions of Article 23 (Non-discrimination), nothing in this Convention shall affect the right of a Contracting State to tax, in accordance with domestic laws, profits derived by a resident of the other Contracting State from sources within the first-mentioned Contracting State from the operation of ships in international traffic.

Article 9
Associated enterprises

  1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

  1. Where a Contracting State includes in the profits of an enterprise of that State, and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State, and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.
  2. The provisions of paragraph 1 shall not limit any provisions of the law of either Contracting State which permit the distribution, apportionment or allocation of income, deductions, credits, or allowances between persons owned or controlled directly or indirectly by the same interests when necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such persons.

Article 10
Dividends

  1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed by both Contracting States.
  2. However, if the beneficial owner of the dividends is a resident of the other Contracting State, the tax charged in the first-mentioned Contracting State shall not exceed:

(a) 15 percent of the gross amount of the dividends if the beneficial owner is a company which owns, directly or indirectly, at least 10 percent of the voting stock of the company paying the dividends;

(b) 25 percent of the gross amount of the dividends in all other cases.

The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

  1. The term “dividends” as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation law of the State of which the company making the distribution is a resident.
  2. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State, of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business profits) or Article 14 (Independent personal services), as the case may be, shall apply.

Article 11
Interest

  1. Interest derived by a resident of one of the Contracting States from sources within the other Contracting State may be taxed by both Contracting States.
  2. Interest derived and beneficially owned by a resident of one of the Contracting States from sources within the other Contracting State shall not be taxed by the other Contracting State at a rate in excess of 15 percent of the gross amount of such interest.
  3. Notwithstanding the provisions of paragraphs 1 and 2 interest derived by one of the Contracting States, or an instrumentality thereof (including the Bangladesh Bank, the Federal Reserve Banks of the United States, the Export-Import Bank of the United States, the Overseas Private Investment Corporation of the United States, and such other institutions of either Contracting State as the competent authorities of both Contracting States may determine by mutual agreement) shall be exempt from tax by the other Contracting State.
  4. The provisions of paragraphs 2 and 3 shall not apply if the recipient of interest from sources within one of the Contracting States, being a resident of the other Contracting State, carries on business in the first-mentioned Contracting State through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 (Business profits) or Article 14 (Independent personal services), as the case may be, shall apply.
  5. Where an amount is paid to a related person and would be treated as interest but for the fact that it exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the amount as would have been paid to an unrelated person. In such a case, the excess amount may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable.
  6. The term “interest” as used in this Convention means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation law of the Contracting State in which the income arises, including interest on deferred payment sales.

Article 12
Royalties

  1. Royalties derived by a resident of one of the Contracting States from sources within the other Contracting State may be taxed by both Contracting States.
  2. Royalties derived and beneficially owned by a resident of one of the Contracting States from sources within the other Contracting State shall not be taxed by the other Contracting State at a rate in excess of:

(a) In the case of royalties described in subparagraph (a) of paragraph 3 of this Article, 10 percent of the gross amount of such royalties; and

(b) 15 percent of the gross amount of the royalties in all other cases.

  1. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use:

(a) any copyright of literary, artistic or scientific work including cinematographic films or films or tapes used for radio or television broadcasting; and

(b) any patent, trade mark, design or model, plan, secret formula or process, or other like right or property, or for information concerning industrial, commercial or scientific experience.

The term “royalties” as described in subparagraph (a) or (b) also includes gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof. However, the term “royalties” does not include any payments in consideration for the working of, or the right to work, mineral deposits, sources and other natural resources.

  1. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the royalties from sources within one of the Contracting States, being a resident of the other Contracting State, carries on business in the first-mentioned Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 (Business profits) or Article 14 (Independent personal services), as the case may be, shall apply.
  2. Where an amount is paid to a related person and would be treated as a royalty but for the fact that it exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the amount as would have been paid to an unrelated person. In such case, the excess amount may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable.

Article 13
Capital gains

  1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6

(Income from immovable property (real property)) and situated in the other Contracting State and of shares of the capital stock of a company the property of which consists principally of such immovable property situated in the other Contracting State may be taxed in that other State.

  1. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.
  2. Gains derived by an enterprise of a Contracting State from the alienation of ships, aircraft or containers operated by such enterprise in international traffic shall be taxable only in that State, and gains described in Article 12 (Royalties) shall be taxable only in accordance with the provisions of Article 12.

Article 14
Independent personal services

Income derived by an individual who is a resident of a Contracting State from the performance of personal services in an independent capacity shall be taxable only in that State unless such services are performed in the other Contracting State and
(a) the individual is present in that other State for a period or periods aggregating more than 90 days in the taxable year concerned, or

(b) the individual has a fixed base regularly available to him in that other State for the purpose of performing his activities,

but only so much of the income as is attributable to that fixed base may be taxed in such other State.
Article 15
Dependent personal services

  1. Subject to the provisions of Articles 18 (Pensions, etc.) and 19 (Government service), salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
  2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the taxable year concerned,

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

  1. Notwithstanding the other provisions of this Article, remuneration derived in respect of an employment as a member of the regular complement of a ship or aircraft operated by an enterprise of a Contracting State in international traffic may be taxed only in that Contracting State.
  2. Notwithstanding the other provisions of this Article and Article 14, where a director’s fee is paid by a company which is a resident of a Contracting State to an individual who is a resident of the other Contracting State and is a shareholder of the company, and such fee is in excess of the amount which would have been paid for such services to an individual who is not a shareholder of the company, such excess amount may be taxed by the first-mentioned Contracting State at a rate not in excess of 25 percent.

Article 16
Investment or holding companies

If 25 percent or more of the capital of a company which is a resident of a Contracting State is owned directly or indirectly by individuals who are not residents of that State, and if by reason of special measures the tax imposed by that State on that company with respect to dividends, interest or royalties arising in the other Contracting State is substantially less than the tax generally imposed by the first-mentioned State on corporate business profits, then, notwithstanding the provisions of Articles 10 (Dividends), 11 (Interest), or 12 (Royalties), that other State may tax such dividends, interest or royalties under the provisions of its internal law. For the purposes of this Article, the source of dividends, interest or royalties shall be determined in accordance with paragraph 3(a), (b) or (c) of Article 22 (Relief from double taxation).
Article 17
Artistes and athletes

  1. Notwithstanding the provisions of Articles 14 (Independent personal services) and 15 (Dependent personal services), income derived by public entertainers such as theater, motion picture, radio or television artistes, and musicians, and by athletes, from their personal activities as such may be taxed in the Contracting State in which these activities are exercised, provided that:

(a) such income exceeds 100 United States dollars or its equivalent in Bangladesh taka per day, or

(b) such income exceeds in the aggregate 3,000 United States dollars or its equivalent in Bangladesh taka during the taxable year.

Provided further that such income shall not be taxable in such Contracting State if the visit of the public entertainers or athletes to that State is within the scope of a cultural or sports exchange program agreed to by both the Contracting States.

  1. Where income in respect of activities exercised by an entertainer or an athlete in his or her capacity as such accrues not to that entertainer or athlete but to another person, that income may, notwithstanding the provisions of Articles 7

(Business profits), 14 (Independent personal services), and 15 (Dependent personal services), be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised. For purposes of the preceding sentence, income of an entertainer or an athlete shall be deemed not to accrue to another person if it is established that neither the entertainer or athlete nor persons related thereto, participate directly or indirectly in the profits of such other person in any manner, including the receipt of deferred remuneration, bonuses, fees, dividends, partnership distributions or other distributions.
Article 18
Pensions, etc.

  1. Subject to the provisions of paragraph 2 of Article 19

(Government service):

(a) pensions and other similar remuneration beneficially derived by a resident of a Contracting State in consideration of past employment shall be taxable only in that State, and

(b) social security payments and other public pensions paid by a Contracting State to an individual who is a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned Contracting State.

  1. Annuities beneficially derived by a resident of a Contracting State shall be taxable only in that State. The term “annuities” as used in this paragraph means a stated sum paid periodically at stated times during life or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered).
  2. Alimony paid to a resident of a Contracting State by a resident of the other Contracting State shall be exempt from tax in the other Contracting State. The term “alimony” as used in this paragraph means periodic payments made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, which payments are taxable to the recipient under the laws of the State of which he is a resident.
  3. Periodic payments for the support of a minor child made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, paid by a resident of one of the Contracting States to a resident of the other Contracting State, shall be exempt from tax in both Contracting States.

Article 19
Government service

1.

(a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to any individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other Contracting State, if the services are rendered in that State and the individual is a resident of and a national of that State.

2.

(a) Any pension paid by, or out of funds created by a Contracting State or a political subdivision or authority to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

  1. The provisions of Articles 14 (Independent personal services), 15 (Dependent personal services), 17 (Artistes and athletes), and 18 (Pensions, etc.), as the case may be, shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20
Teachers, students and trainees

  1. Remuneration which a professor or teacher who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that other State for the purpose of teaching or research in a university, college, school, or other recognized educational institution receives for such work shall not be taxed in that other State for a period not exceeding two years, in respect of that remuneration.
  2. An individual who was a resident of a Contracting State immediately before visiting the other Contracting State and is temporarily present in that other State for the primary purpose of

(a) studying at a university, college, school or other recognized educational institution in that other State, or

(b) securing training as a business or technical apprentice, or

(c) studying or doing research as a recipient of a grant allowance or award from a government, religious, charitable, or educational organization,

shall, from the date of his or her first arrival in that other State in connection with that visit, be exempt from tax in that other State with respect to

(d) all remittances from abroad for purposes of his or her maintenance, education or training;

(e) the grant, allowance, or award, and

(f) any remuneration for personal services rendered in that other Contracting State with a view to supplementing the resources available to him or her for such purposes in an amount not in excess of 4500 United States dollars or its equivalent in Bangladesh taka for any taxable year.

In the case of an individual described in subparagraph (b), this exemption from tax shall apply for a period not exceeding two years from the date of the individual’s first arrival in the other State.
Article 21
Other income

  1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
  2. Notwithstanding paragraph 1, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may be taxed in that other State.

Article 22
Relief from double taxation

  1. In the case of the United States, double taxation shall be avoided as follows: In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof), the United States shall allow to a resident or citizen of the United States as a credit against the United States tax the appropriate amount of tax paid to Bangladesh; and, in the case of a United States company owning at least 10 percent of the voting stock of a company which is a resident of Bangladesh from which it receives dividends in any taxable year, the United States shall allow credit for the appropriate amount of tax paid to Bangladesh by that company with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of tax paid to Bangladesh, but the credit shall not exceed the limitations (for the purpose of limiting the credit to the United States tax on income from sources outside of the United States) provided by the United States law for the taxable year. For purposes of applying the United States credit in relation to tax paid to Bangladesh the taxes referred to in paragraphs 2(b) and 3 of Article 2 (Taxes covered) shall be considered to be income taxes.
  2. In the case of Bangladesh, double taxation shall be avoided as follows: In accordance with the provisions and subject to the limitations of the law of Bangladesh (as it may be amended from time to time without changing the general principle hereof). Bangladesh shall allow to a resident of Bangladesh as a credit against the Bangladesh tax the appropriate amount of tax paid to the United States, and, in the case of a Bangladesh company owning at least 10 percent of the voting stock of a company which is a resident of the United States from which it received dividends in any taxable year, Bangladesh shall allow credit for the appropriate amount of tax paid to the United States by that company with respect to the profits out of which such dividends are paid. Such appropriate amount shall be based upon the amount of tax paid to the United States, but the credit shall not exceed the limitations (for the purpose of limiting the credit to the Bangladesh tax on income from sources outside of Bangladesh) provided by Bangladesh law for the taxable year. For purposes of applying the Bangladesh credit in relation to tax paid to the United States the taxes referred to in paragraphs 2(a) and 3 of Article 2 (Taxes covered) shall be considered to be income taxes.
  3. For the purposes of the preceding paragraphs of this Article, the source of income or profits shall be determined in accordance with the following rules:

(a) Dividends, as defined in paragraph 3 of Article 10 (Dividends) shall be deemed to arise in a Contracting State if paid by a company which is a resident of that State.

(b) Interest, as defined in paragraph 6 of Article 11 (Interest), shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

(c) Royalties, as defined in paragraph 3 of Article 12 (Royalties), shall be deemed to arise in a Contracting State to the extent that such royalties are with respect to the use of, or the right to use, rights or property within that State.

(d) Except for income or profits referred to in subparagraphs (a), (b), or (c), and except for income or profits taxed by the United States solely by reason of citizenship in accordance with paragraph 2 of Article 1 (Personal scope) and income, described in paragraph 2 of Article 21 (Other income), income or profits derived by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise in that other Contracting State.
Article 23
Non-discrimination

  1. Nationals of a Contracting State shall not be subjected in the other State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. For purposes of United States taxation, United States nationals who are not resident in the United States are not in the same circumstances as Bangladesh nationals who are not resident in the United States. This provision shall, notwithstanding the provisions of Article 1 (Personal scope), also apply to persons who are not residents of either Contracting State.
  2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.
  3. Except where the provisions of paragraph 1 of Article 9 (Associated enterprises), paragraph 5 of Article 11 (Interest), or paragraph 5 of Article 12 (Royalties) apply interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same condition as if they had been paid to a resident of the first-mentioned State. The provisions of this paragraph shall not affect the application of the law of Bangladesh requiring the deduction of tax at source, from interest, royalties and other disbursements as a condition for deduction.
  4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
  5. Nothing in this Article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes, which it grants to its own residents.
  6. The provisions of this Article shall apply to taxes of every kind and description imposed by a Contracting State or a political subdivision or local authority thereof.

Article 24
Mutual agreement procedure

  1. Where a person considers that the actions of one or both of the Contracting States result or will result for him or her in taxation not in accordance with the provisions of this Convention, he or she may, irrespective of the remedies provided by the domestic law of those States, present his or her case to the competent authority of the Contracting State of which he or she is a resident or a national.
  2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. If an agreement is reached, it shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
  3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. In particular the competent authorities of the Contracting States may agree:

(a) to the same attribution of income, deductions, credits, or allowances of an enterprise of a Contracting State to its permanent establishment situated in the other Contracting State;

(b) to the same allocation of income, deductions, credits, or allowances between persons, including a uniform position on the application of the requirements of paragraph 2 of Article 23 (Non-discrimination);

(c) to the same characterization of particular items of income;

(d) to the same application of source rules with respect to particular items of income; and

(e) to a common meaning of a term.

They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

  1. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.
  2. In cases where this Convention specifies a dollar amount, the competent authorities may agree to a higher dollar amount.

Article 25
Exchange of information and administrative assistance

  1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1 (Personal scope). Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information for such purposes in public court proceedings or in judicial decisions.
  2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
Article 26
Effect of convention on diplomatic agents and consular officers, domestic laws and other treaties

  1. Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general law or under the provisions of special agreements.
  2. This Convention shall not restrict in any manner, any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded

(a) by the laws of either Contracting State, or

(b) by any other agreement between the Contracting States.
Article 27
Entry into force

  1. This Convention shall be subject to ratification in accordance with the applicable procedures of each Contracting State and instruments of ratification shall be exchanged at Washington as soon as possible.
  2. The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect:

(a) in respect of tax withheld at the source, to amounts paid or credited on or after the first day of the second month next following the date on which this Convention enters into force.

(b) in respect of other taxes, to taxable periods in the United States and income years in Bangladesh beginning on or after the first day of January next following the date on which this Convention enters into force.
Article 28
Termination

  1. This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention at any time after 5 years from the date on which this Convention enters into force provided that at least 6 months’ prior notice of termination has been given through diplomatic channels. In such event, the Convention shall cease to have effect:

(a) In respect of tax withheld at the source, to amounts paid or credited on or after the first day of January next following the expiration of the 6 months’ period;

(b) In respect of other taxes, to taxable periods in the United States and income years in Bangladesh beginning on or after the first day of January next following the expiration of the 6 months’ period.

Done at Dacca in duplicate, this sixth day of October 1980.