Marshall Islands – USA Transport Tax Agreement (1999)

Transportation Tax Agreement (1989)

This Treaty was signed on December 5, 1989 and entered into force on December 5, 1989 .

Agreement Between the UNITED STATES OF AMERICA and the MARSHALL ISLANDS

The American Resident Representative to the Minister of Foreign Affairs of the Marshall Islands

EMBASSY OF THE UNITED STATES OF AMERICA

20-89

The Representative of the United States of America presents his compliments to His Excellency the Minister of Foreign Affairs and has the honor to propose that the Government of the United States of America and the Government of the Republic of the Marshall Islands conclude an agreement confirming the exemption from income tax, on a reciprocal basis, of 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 the Republic of the Marshall Islands (other than U.S. citizens) and corporations which are incorporated in the Marshall Islands. This exemption is granted on the basis of equivalent exemptions granted by the Marshall Islands to individual residents of the United States and to corporations organized in the United States.

In the case of a Marshall Islands Corporation, the exemption shall apply only if the corporation meets the ownership or public trading requirements of U.S. law. For purposes of such ownership requirements, the Government of the Republic of the Marshall Islands shall be treated as an individual resident of the Marshall Islands.

The Honorable
Tom Kijiner
Minister of Foreign Affairs
Republic of the Marshall Islands

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

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

(II) Income from the rental on a bareboat basis of ships or aircraft used in international transport;

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

(IV) Gains from the sale or other alienation of ships or aircraft used in international transport by a person primarily engaged in the international operation of ships or aircraft.

The Government of the United States of America considers that this note, together with the reply note of the Government of the Republic of the Marshall Islands confirming that it agrees to these terms, constitutes an agreement between the two Governments. This agreement shall enter into force on the date of the reply note of the Government of the Marshall Islands and shall have effect with respect to taxable years beginning on or after 1 January 1987.

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

Samuel Thomsen
Embassy of the United States of America,

Majuro, December 5, 1989

The Minister of Foreign Affairs of the Marshall Islands to the American Resident Representative

MINISTRY OF FOREIGN AFFAIRS
REPUBLIC OF THE MARSHALL ISLANDS
MAJURO, MARSHALL ISLANDS

The Minister of Foreign Affairs for the Republic of the Marshall Islands presents his compliments to the Representative of the United States of America. The Government of the Republic of the Marshall Islands acknowledges receipt and agrees to the terms of diplomatic notes exchanged with the Government of the United States of America concluding an agreement confirming the exemption from income tax, on a reciprocal basis, of 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 the Republic of the Marshall Islands (other than U.S. citizens) and corporations which are incorporated in the Marshall Islands. This exemption is granted on the basis of equivalent exemptions granted by the Marshall Islands to individual residents of the United States and to corporations organized in the United States.

In the case of a Marshall Islands corporation, the exemption shall apply only if the corporation meets the ownership or public trading requirements of U.S. law. For purposes of such ownership requirements, the Government of the Marshall Islands shall be treated as an individual resident of the Marshall Islands.

Honorable Samuel Thomsen
Resident Representative United States Embassy
Majuro, Marshall Islands

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

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

(II) Income from the rental on a bareboat basis of ships or aircraft used in international transport;

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

(IV) Gains from the sale or other alienation of ships or aircraft used in international transport by a person primarily engaged in the international operation of ships or aircraft.

The Government of the United States of America considers that its note, together with this reply note of the Government of the Marshall Islands confirming that it agrees to these terms, constitutes an agreement between the two Governments. This agreement shall enter into force on the date of the reply note of the Government of the Marshall Islands and shall have effect with respect to taxable years beginning on or after 1 January 1987.

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

Tom Kijiner
Minister Foreign Affairs
Republic of the Marshall Islands
December 5, 1989
Majuro, Republic of the Marshall Islands