Exchange of Notes

 EXCHANGE OF NOTES

I

Dacca, Bangladesh

October 6, 1980

His Excellency Mr. A.K. Azizul Huq

Secretary, Internal Resources Division,

Ministry of Finance,

Dacca

Excellency:

I have the honour to refer to the 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 which was signed today. The following understandings were reached between our two Governments.

  1. During the course of negotiations leading to the conclusion of the Convention signed today, representatives of Bangladesh stressed the need for increased flows of capital to Bangladesh and asked that special measures be included in the Convention to foster such capital flows from the United States.

The United States delegation, though expressing understanding of this position was unable to agree to the inclusion of such a provision. I wish to assure you, however, that my Government recognizes the importance which your Government places on increased investment in Bangladesh. Accordingly, when circumstances permit, my Government will be prepared to resume discussions with a view to incorporating provisions into this Convention that will minimize the interference of the United States tax system with incentives offered by the Government of the People’s Republic of Bangladesh and that will be consistent with the income tax policies of the United States regarding the least developed countries.

  1. It is our mutual understanding, that in applying Article 7 (Business profits) to any case where the correct amount of profits attributable to a permanent establishment is incapable of precise determination or the ascertaining thereof presents exceptional difficulties, the profits properly attributable to the permanent establishment may be determined on a reasonable basis.

If this is in accordance with your understanding, I would appreciate an acknowledgement from you to that effect.

Accept, Excellency, the renewed assurance of my highest consideration.

Sincerely yours,

David T. Schneider,

Ambassador of the United States of America in Bangladesh

II

Dacca, Bangladesh

October 6, 1980

His Excellency, Mr. David T. Schneider,

Ambassador of the United States of America in Bangladesh.

Excellency,

I have the honour to acknowledge the receipt of your Excellency’s Note of today’s date which reads as follows:

(see I)

  1. I have the honour to confirm the above mentioned understanding on behalf of the Government of the People’s Republic of Bangladesh.
  2. Please accept, Excellency, the assurances of my highest consideration.

A.K. Azizul Huq

Secretary, Internal Resources Division,

Ministry of Finance,

Government of the People’s Republic of Bangladesh.