Bolivia – USA Transport Tax Agreement (1987)

Transportation Tax Agreement (1987) 

This Treaty was signed on November 23, 1987 and entered into force on November 23, 1987.

Agreement Between the UNITED STATES OF AMERICA and BOLIVIA

The Department of State to the Bolivian Embassy

The Department of State proposes to the Embassy of Bolivia that the Government of the United States of America and the Government of Bolivia conclude an agreement to exempt from income tax, on a reciprocal basis, income derived by residents of the other country from the international operation of ships and aircraft. The terms of the agreement are as follows:

The Government of the United States of America, in accordance with sections 872(b) and 883(a) of the Internal Revenue Code, agrees to exempt from tax gross income derived from the international operation of ships or aircraft by individuals who are residents of Bolivia (other than U.S. citizens) and corporations organized in Bolivia. This exemption is granted on the basis of equivalent exemptions granted by Bolivia to citizens of the United States (who are not residents of Bolivia) and to corporations organized in the United States (which are not subject to tax by Bolivia on the basis of residence).

In the case of a corporation, the exemption shall apply only if the corporation meets either of the following conditions:

(1) More than 50 percent of the value of the corporation’s stock is owned, directly or indirectly, by individuals who are residents of Bolivia or of another country which grants a reciprocal exemption to U.S. citizens and corporations; or

(2) the corporation’s stock is primarily and regularly traded on an established securities market in Bolivia, or is wholly owned by a corporation whose stock is so traded and which is also organized in Bolivia.

For purposes of the exemption from U.S. tax, subparagraph (1) will be considered to be satisfied if the corporation is a “controlled foreign corporation” under the Internal Revenue Code.

Gross income includes all income derived from the international operation of ships or aircraft, including income from the rental of ships or aircraft on a full (time or voyage) basis and income from the rental of containers and related equipment which is incidental to the international operation of ships or aircraft. It also includes income from the rental on a bareboat basis of ships and aircraft used for international transport.

The Department of State considers that this note, together with the Embassy’s reply note confirming that the Government of Bolivia agrees to these terms, constitutes an agreement between the two Governments. This agreement shall enter into force on the date of the Embassy’s reply note and shall have effet with respect to taxable years beginning on or after January 1, 1987.

Either Government may terminate this agreement by giving written notice of termination through diplomatic channels.

For use by the Government of Bolivia, a draft reply note is enclosed.

Enclosure:
As stated
Department of State,

Washington,
July 21 1987
The Bolivian Embassy to the Department of State
EMBAJADA DE BOLIVIA
WASHINGTON, D.C. 20008
EMBO 608/87

The Embassy of Bolivia presents its compliments to the Department of State and has the honor to acknowledge receipt of the Department’s note of July 21, 1987 proposing the terms of a reciprocal exemption from income tax of income derived from the international operation of ships and aircraft.

The Government of Bolivia agrees to exempt from tax gross income derived from the international operation of ships or aircraft by U.S. citizens (who are not residents of Bolivia) and corporations organized in the United States (other than corporations which are subject to tax by Bolivia on the basis of residence).

In the case of a corporation, the exemption shall apply only if the corporation meets either of the following conditions:

(1) More than 50 percent of the value of the corporation’s stock is owned, directly or indirectly, by individuals who are citizens of United States or of another country which grants a reciprocal exemption to Bolivian residents and corporations; or

(2) the corporation’s stock is primarily and regularly traded on an established securities market in the United States, or is wholly owned by a corporation whose stock is so traded and which is also organized in the United States.

Gross income includes all income derived from the international operation of ships or aircraft, including income from the rental of ships or aircraft on a full (time or voyage) basis and income from the rental of containers and related equipment which is incidental to the international operation of ships or aircraft. It also includes income from the rental on a bareboat basis of ships and aircraft used for international transport.

The Embassy is pleased to confirm that the Department of State’s note and this reply note constitute an agreement between the two Governments, which shall enter into force on November 23, 1987 and shall have effect with respect to taxable years beginning on or after January 1, 1987.

Either Government may terminate this agreement by giving written notice of termination through diplomatic channels.

The Embassy of Bolivia takes this opportunity to renew to the Department of State the assurances of its highest consideration.

November 23, 1987

Department of State Washington, D.C.