Tax Information Exchange Agreement and Supplementary Notes (1991)
This Treaty was signed on March 14, 1991 and entered into force on March 14, 1991.
AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF THE MARSHALL ISLANDS FOR THE EXCHANGE OF INFORMATION WITH RESPECT TO TAXES
THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF THE MARSHALL ISLANDS,
DESIRING to conclude an Agreement for the exchange of information with respect to taxes (hereinafter referred to as the “Agreement”),
HAVE AGREED AS FOLLOWS:
Article I. Object and Scope of the Agreement
1. The Contracting States shall assist each other to assure the accurate assessment and collection of taxes, to prevent fiscal fraud and evasion, and to develop improved information sources for tax matters. The Contracting States shall provide assistance through exchange of information authorized pursuant to Article IV and such related measures authorized pursuant to Articles V and VI.
2. Information shall be exchanged to fulfill the purpose of this agreement without regard to whether the person to whom the information relates is, or whether the information is held by, a resident or national of a Contracting State.
3. This Agreement is consistent with the standards for an exchange of information agreement described in Section 274(h)(6)(C) of the United States Internal Revenue Code of 1986, as amended (the “Code”) and referred to by cross-reference in Section 927(e)(3)(A) of the Code, and is intended to meet the requirement specified in Section 255(b) of the Compact of Free Association between the Government of the United States and the Government of the Marshall Islands, as amended.
Article II. Taxes Covered
1. This Agreement shall apply to the following taxes imposed by or on behalf of a Contracting State:
a) in the case of the United States of America,
(i) Federal income taxes,
(ii) Federal taxes on self-employment income,
(iii) Federal taxes on transfers to avoid income tax,
(iv) Federal estate and gift taxes,
(v) Federal excise taxes; and
b) in the case of the Marshall Islands, the National income taxes.
2. This Agreement shall apply also to any identical or substantially similar taxes imposed after the date of signature of the Agreement in addition to or in place of the existing taxes. The competent authority of each Contracting State shall notify the other of significant changes in laws which may affect the obligations of that State pursuant to this Agreement.
3. This Agreement shall not apply to the extent that an action or proceeding concerning taxes covered by this Agreement is barred by the applicant State’s statute of limitations.
4. This Agreement shall not apply to taxes imposed by states, municipalities or other political subdivisions, or possessions of a Contracting State.
Article III. Definitions
1. In this Agreement, unless otherwise defined:
a) The term “competent authority” means:
(i) in the case of the United States of America, the Secretary of the Treasury or his delegate, and (ii) in the case of the Marshall Islands, the Minister of Finance or his delegate.
b) The term “national” means:
(i) in the case of the United States, any individual who is a citizen or national of the United States and any legal person other than an individual deriving its status as such from the laws in force in the United States, and its political subdivisions; and
(ii) in the case of the Marshall Islands, any individual who is a citizen of or national of the Marshall Islands and any legal person other than an individual deriving its status as such from the laws in force in the Marshall Islands and its political subdivisions.
c) The term “person” includes an individual and a partnership, corporation, trust, estate, association or other legal entity.
d) The term “tax” means any tax to which this Agreement applies.
e) The term “information” means any fact or statement, in any form whatever, that may be relevant or material to tax administration and enforcement, including (but not limited to):
(i) testimony of an individual and
(ii) documents, records or tangible personal property of a person or Contracting State.
f) The terms “applicant State” and “requested State” mean, respectively, the Contracting State applying for or receiving information and the Contracting State providing or requested to provide such information.
g) For purposes of determining the geographical area within which jurisdiction to compel production of information may be exercised, the term “United States” means the United States of America, including Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Marina Islands and any other United States possession or territory.
h) For purposes of determining the geographical area within which jurisdiction to compel production of information may be exercised, the term “Marshall Islands” means the Marshall Islands as defined in section 461(c) of the Compact of Free Association.
2. Any term not defined in this Agreement, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to provisions of Article V, shall have the meaning which it has under the laws of the Contracting State relating to the taxes which are the subject of this Agreement.
Article IV. Exchange of Information
1. The competent authorities of the Contracting States shall exchange information to administer and enforce the domestic laws of the Contracting States concerning taxes covered by this Agreement, including information to effect the determination, assessment, and collection of tax, the recovery and enforcement of tax claims, or the investigation or prosecution of tax crimes or crimes involving the contravention of tax administration.
2. The competent authorities of the Contracting States may provide for the automatic transmission of information to each other for the purposes referred to in paragraph 1. The competent authorities shall determine, by mutual agreement, the items of information to be exchanged pursuant to this paragraph and the procedures to be used to exchange such items of information.
3. The competent authority of a Contracting State shall endeavor to spontaneously transmit to the competent authority of the other State information which has come to the attention of the first-mentioned State and which is likely to be relevant to, and bear significantly on, accomplishment of the purposes referred to in paragraph 1. The competent authorities shall determine, by mutual agreement, the type of information to be exchanged pursuant to this paragraph and shall take such measures and implement such procedures as are necessary to ensure that the information is forwarded to the competent authority of the other State.
4. The competent authority of the requested State shall endeavor to provide information upon request by the competent authority of the applicant State for the purposes referred to in paragraph 1. If the information available in the tax files of the requested State is not sufficient to enable compliance with the request, that State shall take all relevant measures, including compulsory measures as authorized by the laws of that State with respect to its own taxes, to provide the applicant State with the information requested.
a) The requested State shall have the authority to:
(i) examine any books, papers, records, or other tangible property which may be relevant or material to such inquiry;
(ii) question any person having knowledge or in possession, custody or control of information which may be relevant or material to such inquiry;
(iii) compel any person having knowledge or in possession, custody or control of information which may be relevant or material to such inquiry to appear at a stated time and place and testify under oath and produce books, papers, records, or other tangible property; and
(iv) take such testimony of any individual under oath.
b) Laws or practices of the requested State pertaining to nondisclosure of information:
(i) by banks, nominees or persons acting in an agency or fiduciary capacity, or
(ii) respecting ownership of interests in a person (other than solely as a creditor) shall not prevent or otherwise affect the authority of the requested State described in subparagraph a). The competent authorities of the Contracting States shall have authority to obtain and provide information notwithstanding such disclosure laws and practices.
c) Privileges under the laws or practices of the applicant State shall not apply in the execution of a request but shall be preserved for resolution by the applicant State.
5. If information is requested by a Contracting State pursuant to paragraph 4, the requested State shall endeavor to obtain the information requested in the same manner, and provide it in the same form, as if the tax of the applicant State were the tax of the requested State and were being imposed by the requested State. If specifically requested by the competent authority of the applicant State, the requested State shall endeavor to:
a) specify the time and place for the taking of testimony or the production of books, papers, records, and other tangible property.
b) place the individual giving testimony or producing books, papers, records and other tangible property under oath;
c) permit the presence of individuals designated by the competent authority of the applicant State as being involved in or affected by execution of the request, including an accused, counsel for the accused, individuals charged with the administration and enforcement of the domestic laws of the applicant State covered by this Agreement, and a commissioner or magistrate present for the purpose of determining issues of privilege under the laws of the applicant State;
d) provide individuals permitted to be present with an opportunity to question, directly or through the executing authority, the individual giving testimony or producing books, papers, records and other tangible property;
e) secure and provide information under this Article in the form of original and unedited books, papers, and records, and other tangible property;
f) secure or produce true and correct copies of original and unedited books, papers and records; g) determine the authenticity of books, papers, records and other tangible property produced;
h) examine the individual producing books, papers, records and other tangible property regarding the purpose for which and the manner in which the item produced is or was maintained to the same extent that such documents can be obtained under the laws and administrative practices of the requested State with respect to its own taxes;
i) permit the competent authority of the applicant State to provide written questions to which the individual producing books, papers, records and other tangible property is to respond regarding the item produced;
j) perform any other act not in violation of the laws or at variance with the administrative practices of the requested State; and
k) certify either that procedures requested by the competent authority of the applicant State were followed or that the procedures requested could not be followed, with an explanation of the deviation, and the reason therefore.
6. The provisions of the preceding paragraphs shall not 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 State or of the other Contracting State;
b) to supply particular items of information which are not obtainable under the laws or in the normal course of the administration of that State or of the other Contracting State;
c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process;
d) to supply information, the disclosure of which would be contrary to public policy (ordre public);
e) to supply information requested by the applicant State to administer or enforce a provision of the tax law of the applicant State, or any requirement connected therewith, which discriminates against a national of the requested State. A provision of tax law, or connected requirement, will be considered to be discriminatory against a national of the requested State if it is more burdensome with respect to a national of the requested State than with respect to a national of the applicant State in the same circumstances. For purposes of the preceding sentence, a national of the applicant State who is subject to tax on worldwide income is not in the same circumstances as a national of the requested State who is not subject to tax on worldwide income. The provisions of this paragraph shall not be construed to prevent exchange of information with respect to the taxes imposed by the United States on branch profits, the United States excise tax on premiums paid to foreign insurers, or the Marshall Islands tax on non-resident professional attorneys.
7. Except as provided in paragraph 6, the provisions of the preceding paragraphs shall be construed so as to impose on a Contracting State the obligation to use all legal means and its best efforts to execute a request. A Contracting State may, in its discretion, take measures to obtain and transmit to the other State information which, pursuant to paragraph 6, it has no obligation to transmit.
8. The competent authority of the requested State shall, upon reasonable notice, allow representatives of the applicant State to enter the requested State to interview individuals and examine books and records with the consent of the individuals contacted.
9. Any information received by a contracting State pursuant to this Agreement 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 individuals or authorities (including judicial and administrative bodies) involved in the determination, assessment, collection, and administration of, the recovery and collection of claims derived from, the enforcement or prosecution in respect of, or the determination of appeals in respect of, the taxes which are the subject of this Agreement, or the oversight of the above. Such individuals or authorities shall use the information only for such purposes. These individuals or authorities may disclose the information in public court proceedings or in judicial decisions. Information shall not be disclosed to any third jurisdiction for any purpose without the consent of the contracting State originally furnishing the information.
Article V. Mutual Agreement Procedure
1. The competent authorities of the Contracting States shall agree to implement a program to carry out the purposes of this Agreement. This program may include, in addition to exchanges specified in Article IV, other measures to improve tax compliance, such as exchanges of technical know-how, development of new audit techniques, identification of new areas of non-compliance, and joint studies of non- compliance areas. The Commissioner of Internal Revenue of the Government of the United States shall endeavor to provide technical assistance to the Government of the Marshall Islands consistent with Section 226 of the Compact of Free Association and Section 105(1) of U. S. Public Law 99-239. Technical assistance may include training in the administration and enforcement of tax laws, including, without cost or fee, training and training aids pursuant to Treasury Regulation section 301.7516-1. However, the Government of the United States reserves the right to charge a fee for technical assistance in appropriate cases.
2. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. In particular, the competent authorities may agree to a common meaning of a term and may determine when costs are extraordinary for purposes of Article VI.
3. The competent authorities of the Contracting States may communicate with each other directly for the purposes of reaching an agreement under this Article.
Article VI. Costs
Unless the competent authorities of the Contracting States otherwise agree, ordinary costs incurred in providing assistance shall be borne by the requested State and extraordinary costs incurred in providing assistance shall be borne by the applicant State.
Article VII. Implementation
Each of the Contracting States shall take all necessary steps, of a general or particular character, to ensure the conformity of its laws, regulations and administrative procedures with the provisions of this Agreement.
Article VIII. Effective Date, Amendment and Duration
1. This agreement shall enter into force upon signature by the duly authorized representatives of the Contracting States.
2. This agreement may be amended at any time by mutual consent of the Contracting States.
3. This agreement may be terminated by mutual consent of the Contracting States.
4. This agreement may be terminated unilaterally by either Contracting State at any time after the agreement takes effect, such termination to be effective on the date specified in the notice of termination by the notifying State to the other State but not earlier than one year after the date of delivery of such notice to the resident representative of the other State. The time specified in the notice of termination may be extended by the notifying government.
DONE at Majuro, in duplicate, in the English language, the two texts have equal authenticity, this 14th day of March, 1991.
1. If, pursuant to paragraph 5 of Article IV of the Agreement, individuals designated by the competent authority of the United States are present in the Marshall Islands for the purpose of taking the deposition of any individual, then such deposition will be taken under the general supervision of the appropriate officials of the Government of the Marshall Islands, including judicial officials.
2. It is the understanding of the negotiators of the Agreement that the provisions of paragraph 6(b) of Article IV of the Agreement shall be construed so the various privileges under the laws or practices of the requested state shall apply in the execution of a request.