Liberia – USA Transport Tax Agreement (1987)

Transportation Tax Agreement (1987)

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

The American Embassy to the Liberian Ministry of Foreign Affairs

EMBASSY OF THE UNITED STATES OF AMERICA

NO. 281

THE EMBASSY OF THE UNITED STATES OF AMERICA presents its compliments to the Ministry of Foreign Affairs of the Republic of Liberia and has the honor to propose that the two governments 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 Liberian persons, including Liberian residents and/or corporations organized in the Republic of Liberia. This exemption is granted on the basis of equivalent exemptions granted by the Republic of Liberia to United States persons and to corporations organized in the United States.

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 the Republic of Liberia 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 the Republic of Liberia, or is wholly owned, directly or indirectly, by a corporation whose stock is so traded and which is also organized in the Republic of Liberia.

For purposes of Subparagraph 1, the Government of the Republic of Liberia will be treated as an individual resident of the Republic of Liberia. 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 or chartering 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 and income from the disposition of ships or aircraft which is incidental to other income referred to in this paragraph.

The Embassy of the United States of America considers that this note, together with the Ministry’s reply note confirming that the Government of the Republic of Liberia to these terms, constitutes an agreement amending the agreement of July 1 and August 11, 1982. This agreement shall enter into force on the date of the Ministry’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.

The Embassy of the United States of America takes this opportunity to renew to the Ministry of Foreign Affairs of the Republic of Liberia the assurances of its highest consideration.

Embassy of the United States of America,
Monrovia, October 7, 1987.

The Liberian Ministry of Foreign Affairs to the American Embassy

MINISTRY OF FOREIGN AFFAIRS
MONROVIA, LIBERIA
10712/2-5

The Ministry of Foreign Affairs of the Republic of Liberia presents its compliments to the Embassy of the United States of America and has the honour to acknowledge receipt of the latter’s Note No. 281 of 7 October 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 the Republic of Liberia agrees to exempt from tax gross income derived from the international operation of ships or aircraft by U.S. persons, including U.S. citizens and/or Corporations organized in the United States.

Gross income includes all income derived from the international operation, chartering or disposition 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 Ministry of Foreign Affairs is pleased to confirm that the Embassy’s Note and this Reply Note constitute an Agreement amending the Agreement of July 1 and August 11, 1982 which shall enter into force on today’s date 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 Ministry of Foreign Affairs of the Republic of Liberia takes this opportunity to renew to the Embassy of the United States of America the assurances of its high consideration and esteem.

The American Embassy
MONROVIA
October 23, 1987