Chile – USA Transport Tax Agreement (1990)

Transportation Tax Agreement (1990)

This Treaty was signed on December 4, 1990 and entered into force on December 4, 1990.

Agreement between the United States of America and Chile concerning reciprocal exemption from income tax of income derived from the international operation of aircraft. Washington, 6 August 1990 and Santiago, 4 December 1990

I

The Secretary of State to the Chilean Ambassador

The Secretary of State presents his compliments to His Excellency the Ambassador of Chile and has the honor to propose that the Government of the United States of America and the Government of Chile conclude an agreement to exempt from tax, on a reciprocal basis, gross income derived by residents of the other country from the international operation of aircraft. The terms of the agreement are as follows:

The Government of the United States of America, in accordance with Section 872[b] and 883[a] of the Internal Revenue Code, agrees to exempt from tax gross income derived from the international operation of aircraft by individuals who are residents of Chile [other than U.S. citizens] and corporations organized in Chile. This exemption is granted on the basis of equivalent exemptions granted by Chile to individual residents of the United States and to corporations which are organized in the United States.

In the case of a Chilean corporation, the exemption shall apply only if the corporation meets the ownership or public trading requirement of U.S. law.

Gross income includes all income derived from the international operation of aircraft, including:

(I) income from the rental on a full [time or voyage] basis of aircraft used in international transport;

(II) income from the rental on a bareboat basis of aircraft used in international transport if such income is incidental to income from the international operation of aircraft; and

(III) income from the rental of containers and related equipment used in international transport which is incidental to income from the international operation of aircraft.

It does not include the gains from the sale, disposal or other alienation of aircraft by a person or corporation engaged in the international operation of aircraft, or any other gains or income not directly related to such operation.

The Government of the United States of America considers that this note, together with the Embassy of Chile’s reply note confirming that all internal steps necessary for the approval of this agreement in Chile have been taken, constitutes an agreement between the two governments. This agreement shall enter into force on the date of the Embassy of Chile’s reply note 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.

DEPARTMENT OF STATE

Washington, Aug 06 1990

II

REPUBLIC OF CHILE
MINISTRY OF FOREIGN RELATIONS
Santiago, December 4, 1990

No. 23675

The Minister of Foreign Relations of the Republic of Chile presents his compliments to His Excellency the Secretary of State of the United States of America and, in reference to the Secretary’s note of August 6, 1990, has the honor to communicate the acceptance of the Government of Chile of the Convention to exempt, on a reciprocal basis, gross income derived by the residents of the other country from the international operation of aircraft, which reads as follows:

Quote:

The Government of the Republic of Chile, in conformity with the regulations of its tax legislation, agrees to exempt from tax gross income derived from the international operation of aircraft by natural persons who reside in the United States of America (who are not Chilean citizens) and companies organized in the United States. This exemption is granted on the basis of equivalent exemptions granted by the United States of America to natural persons who reside in Chile and to companies organized in Chile.

In the case of U.S. companies, the exemption shall apply only if the company meets the ownership or public trading requirements of Chilean law.

Gross income includes all income derived from the international operation of aircraft, including:

(I) Income derived from the rental on a full (time or voyage) basis of aircraft used in international transport;

(II) Income from the rental on a bareboat basis of aircraft used in international transport if such income is incidental to income from the international operation of aircraft; and

(III) Income derived from the rental of containers and related equipment used in international transport which is incidental to income from the international operation of aircraft.

It shall not apply to the gains from the sale, disposal, or other alienation of aircraft by natural persons or companies engaged in the international operation of aircraft, nor shall it apply to any other gains or income not directly related to such operation.

The Government of the Republic of Chile considers that this note, together with that of Your Excellency, constitutes an agreement between the two Governments which will enter into effect on the date of the note from our Embassy which confirms to the Department of State that the Convention has been approved in Chile in accordance with Chilean internal legal procedures, and it will govern tax years beginning with or after January 1, 1987.

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

Unquote.

[ILLEGIBLE]

Santiago, 4 December 1990
His Excellency James Baker
Secretary of State
of the United States of America