Exchange of Notes

EXCHANGE OF NOTES

I

DEPARTMENT OF STATE, Washington, May 26, 1995

HIS EXCELLENCY YURIY SHCHERBAK, Ambassador of Ukraine.

Excellency: I have the honor to refer to the Convention between the Government of the United States of America and the Government of Ukraine for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, together with a related Protocol, signed at Washington on March 4, 1994 (“Taxation Convention”) and the General Agreement on Trade in Services (“GATS”).

The Government of the United States is a Party to the GATS, annexed to the Agreement Establishing the World Trade Organization, done at Marrakesh April 15, 1994. The Government of Ukraine is not yet a party to the GATS. The United States and Ukraine have, however, considered the relationship between the Taxation Convention and the GATS in the event that the GATS applies between them, particularly with regard to the Consultation provision in Article XXII of the GATS and the Most-Favored-Nation and National Treatment provisions in Articles II and XVII of the GATS. In addition, the United States and Ukraine have considered the relationship between the Taxation Convention and other agreements that apply between them and that have provisions concerning national treatment or most-favored-nation treatment.

To address these issues, I have the honor to propose that:

(1) notwithstanding Article XXII and footnote 11 of the GATS, in the event that the GATS applies between the United States and Ukraine, a dispute concerning whether a measure is within the scope of the Taxation Convention shall be considered only pursuant to Article 26 (Mutual Agreement Procedure) of the Taxation Convention by the competent authorities of the United States and Ukraine as defined in subparagraph 1(j) of Article 3 (General Definitions); and

(2) unless the competent authorities determine that a taxation measure is not within the scope of the Taxation Convention, national treatment or most-favored-nation obligations under any other agreement (including GATS in the event that it applies between the United States and Ukraine) shall not apply to a taxation measure, except for such national treatment or most- favored-nation obligations as may apply to trade in goods under the Agreement on Trade Relations between the United States and Ukraine, signed on May 6, 1992, and the General Agreement on Tariffs and Trade if it applies between the United States and Ukraine.

If this proposal is acceptable to the Government of Ukraine, I have the further honor to propose that this note, and your Government’s note in reply, shall constitute an agreement which shall enter into force on the date the Taxation Convention enters into force.

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

For the Secretary of State:

Alan Larson.

II

Embassy of Ukraine June 6, 1995

His Excellency Warren Christopher, Secretary of State

Excellency:

I have the honor to refer to your note of 26 May 1995, concerning the Convention between the Government of the United States of America and the Government of Ukraine for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, together with a related Protocol, signed at Washington on 4 March 1994 (“Taxation Convention”) and the General Agreement on Trade in Services (“GATS”).

The proposal as contained in your aforementioned note reads as follows:

[see I]

I am pleased to confirm that this proposal is acceptable to the Government of Ukraine and that your note and this note in reply shall constitute an Agreement which shall enter into force on the date the Taxation Convention enters into force.

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

Valeri Kuchinsky for the Ambassador of Ukraine