Letter of Submittal

GENERAL EFFECTIVE DATE UNDER ARTICLE 29: 1 JANUARY 1982 TABLE OF ARTICLES

MESSAGE
FROM
THE PRESIDENT OF THE UNITED STATES
TRANSMITTING
THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF JAMAICA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME (THE CONVENTION), TOGETHER WITH A RELATED EXCHANGE OF NOTES, SIGNED AT KINGSTON ON MAY 21, 1980

LETTER OF SUBMITTAL

DEPARTMENT OF STATE,
Washington, July 17, 1980.

The PRESIDENT,
The White House.

THE PRESIDENT: I have the honor to submit to you, with a view to transmission to the Senate for advice and consent to ratification, the Convention between the Government of the United States of America and the Government of Jamaica for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the Convention), together with a related exchange of notes, signed at Kingston on May 21, 1980.

The Convention will replace the extension in 1959 to Jamaica of the 1945 Income Tax Convention between the United States and the United Kingdom, as amended by Protocols of June 6, 1946, May 25, 1954, and August 16, 1957.

The Convention, in general, follows the pattern of the United States model income tax convention, although there are some deviations to accommodate Jamaica’s status as a developing country. For example, as in the model convention, business profits of an enterprise of one country may be taxed by the other only if they are attributable to a permanent establishment in the other country. In the proposed Convention, however, the definition of a permanent establishment is more broadly drawn. Similarly, in the United States model, an individual who is a resident of one State may be taxed by the other on income from personal services performed in the other State only if certain tests are met, but in the proposed Convention, the time threshold is shorter for independent services and a dollar threshold is added. With respect to entertainers, the dollar threshold is lower than in the United States model.

Maximum rates of tax are established on a reciprocal basis for the taxation by the source country of dividends, interest and royalties, which, in general, exceed the rates specified in the United States model. The rates, however, are consistent with those established in other United States treaties with developing countries. For dividends, the maximum rate, in general, is 15 percent, as in the United States model, though the lower 10 percent rate provided for subsidiary dividends exceeds the rate specified in the United States model.

Interest is taxable at the source at a maximum rate of 12.5 percent, except that interest received, guaranteed, or insured by a Contracting State or instrumentality is exempt. Royalties, including motion picture royalties, are subject to a maximum rate of tax at source of 10 percent.

The Convention, with minor deviations from the model provisions, contains the usual rules relating to real property income, the treatment of students, pensioners and government employees, nondiscrimination, and administrative cooperation. The capital gain provision provides for tax on the alienation of stock of a company or interest in a partnership, trust or estate if the value of such entities are derived principally from immovable property located in the other Contracting State.

The Convention differs from the United States model by including provisions dealing with directors’ fees and teachers.

The exchange of notes sets forth certain understandings between the two Governments. It deals, among other matters, with the conditions under which the United States would allow a foreign tax credit for Jamaican income taxes on bauxite profits. The exchange of notes also confirms the fact that the Convention has been designed to cover a substitute tax which may be imposed by Jamaica “in lieu of” the corporate income tax on such profits if such substitute tax meets the requirement of section 903 of the Internal Revenue Code.

The Convention will enter into force upon the exchange of instruments of ratification. The provisions of the Convention 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 the Convention enters into force;

(b) in respect of other taxes, to taxable periods beginning on or after the first day of January next following the date on which the Convention enters into force.

Upon these provisions becoming effective, the corresponding provisions of the 1945 income tax convention with the United Kingdom, as amended, will cease to have effect between the United States and Jamaica.

A technical memorandum explaining in detail the provisions of the Convention is being prepared by the Department of the Treasury and will be submitted to the Senate Committee on Foreign Relations.

The Department of the Treasury, with the cooperation of the Department of State, was primarily responsible for the negotiation of the Convention. It has the approval of both Departments.

Respectfully submitted,

EDMUND S. MUSKIE.

LETTER OF TRANSMITTAL

THE WHITE HOUSE,
August 4, 1980.

To the Senate of the United States:

I transmit herewith, for the advice and consent of the Senate to ratification, a Convention between the Government of the United States of America and the Government of Jamaica for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the Convention), together with a related exchange of notes, signed at Kingston on May 21, 1980. I also transmit the report of the Department of State with respect to the Convention.

In general, the Convention follows the pattern of the United States model income tax convention, although there are some accommodations to Jamaica’s status as a developing country. For example, business profits of an enterprise of one country as in the model convention, may be taxed by the other only if they are attributable to a permanent establishment in the other country. In the proposed Convention, however, the definition of a permanent establishment is more broadly drawn. Similarly, in the United States model, an individual who is a resident of one State may be taxed by the other on income from personal services performed in the other State only if certain thresholds are passed, but in the proposed Convention, the time threshold is shorter for independent services and a dollar threshold has been added.

The exchange of notes sets forth certain understandings between the two Governments. It deals, among other matters, with the conditions under which the United States would allow a foreign tax credit for Jamaican income taxes on bauxite profits. The exchange of notes also confirms the fact that the Convention has been designed to cover a substitute tax which may be imposed by Jamaica “in lieu of” the corporate income tax on such profits if such substitute tax meets the requirement of section 903 of the Internal Revenue Code.

I recommend that the Senate give early and favorable consideration to the Convention and its advice and consent to ratification.

JIMMY CARTER.

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION

CONSIDERING THAT:

The Convention between the Government of the United States of America and the Government of Jamaica for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income was signed at Kingston on May 21, 1980, together with a related exchange of notes, and the Protocol Amending the 1980 Convention, together with a related exchange of notes, was signed at Kingston on July 17, 1981 the texts of which are hereto annexed;

The Senate of the United States of America by its resolution of December 16, 1981, two- thirds of the Senators present concurring therein, gave its advice and consent to ratification of the Convention, Amending Protocol and related exchanges of notes, subject to the following:

1) reservation that, notwithstanding the provisions of paragraph (5) of Article 13 of the Convention (which relates to the taxation of gains from the alienation of shares of a corporation or of an interest in a partnership, estate, or trust, the property of which consists, directly or indirectly, principally of real property situated in one of the countries), gain derived by a resident of a Contracting State from the alienation or other disposition of an interest in a corporation, or an interest in a partnership, trust, or estate, which has an interest in real property located in the other Contracting State, or the assets of which are considered under the domestic law of that other Contracting State to consist, in whole or in part, of real property, or an interest therein, in that other State, may be taxed by that other State to the extent provided for by its domestic law. In addition, gain derived by a corporation which is a resident of a Contracting State upon the distribution (including a distribution in liquidation or otherwise) of an interest in real property in the other Contracting State (as determined under the domestic law of the other Contracting State) may be taxed by that other Contracting State to the extent provided for by its domestic law.

2) understanding that appropriate Congressional Committees and the General Accounting Office shall be afforded access to the information exchanged under this Convention where such access is necessary to carry out their oversight responsibilities, subject only to the limitations and procedures of the Internal Revenue Code.

The Convention, Amending Protocol and related exchanges of notes were ratified, subject to the aforesaid reservation and understanding by the President of the United States of America on December 22, 1981, in pursuance of the advice and consent of the Senate, and was ratified on the part of the Government of Jamaica;

The instruments of ratification of the Convention, Amending Protocol and related exchanges of notes were exchanged at Kingston on December 29, 1981, and accordingly the Convention and Amending Protocol entered into force on December 29, 1981, effective as specified in Article 29 of the Convention;

NOW, THEREFORE, I, Ronald Reagan, President of the United States of America, proclaim and make public the Convention, Amending Protocol and related exchanges of notes to the end that they be observed and fulfilled with good faith on and after December 29, 1981, by the United States of America and by the citizens of the United States of America and all other persons subject to the jurisdiction thereof.

IN TESTIMONY WHEREOF, I have signed this proclamation and caused the Seal of the United States of America to be affixed.

DONE at the city of Washington this twentieth day of January in the year of our Lord one thousand nine hundred eighty-two and of the Independence of the United States of America the two hundred sixth.

By the President:

RONALD REAGAN

ALEXANDER M. HAIG JR.
Secretary of State